Armstrong v Atlantic Caravans Pty Ltd and Hinterland Caravans Morisset

[2017] NSWCATCD 86

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Armstrong v Atlantic Caravans Pty Ltd & Hinterland Caravans Morisset [2017] NSWCATCD 86

Hearing dates:

04 August 2017

Date of orders:

03 August 0201

Decision date:

22 September 2017

Jurisdiction:

Consumer and Commercial Division

Before:

D. Moss, General Member

Decision:

On 4 August 2017 the following orders were made:

1.  Hinterland Outdoors Pty Ltd trading as Hinterland Caravans Morisset and Atlantic Caravans Pty Ltd, jointly and severally, are to pay Ronald Armstrong the sum of $75,108.00 on or before 01-Sep-2017.

Reasons: $75,108.00 – damages for breach of consumer guarantee of acceptable quality.

Catchwords:

CONSUMER LAW – application for refund of purchase price - alleged failure to comply with consumer guarantee under Australian Consumer Law (NSW) – acceptable quality – fitness for purpose - whether major failure – alleged misrepresentation – alleged breach of contract - alleged non-compliance with sample.

Legislation Cited:

Fair Trading Act 1997 (NSW);
Australian Consumer Law (NSW);
Civil and Administrative Tribunal Act 2013 (NSW);
Civil and Administrative Tribunal Rules 2014 (NSW)

Texts Cited:

Australian Law Commentary and Materials (Fourth Edition) Corones and Clarke

Category:

Principal judgment

Parties:

Ronald Armstrong, (“the consumer”), (the Applicant)
Atlantic Caravans Pty Ltd, (“the manufacturer”), (the First Respondent)
Hinterland Outdoors Pty Ltd trading as Hinterland Caravans Morisset, (“the supplier”), (the Second Respondent)

Representation:

The Applicant appeared in person.
The First Respondent was represented by Mr Chiodo (by telephone).
The Second Respondent was represented by Mr Sealie.

File Number(s):

MV 16/48760

Publication restriction:

Unrestricted

REASONS FOR DECISION

Application

1. On 7 November 2016, the Applicant filed an application seeking an order that the Respondents pay him a refund of $73,500.00, plus expenses.

2. The matter was listed on 28 November 2016. Conciliation was attempted but was unsuccessful. Procedural directions were made for the filing and exchange of evidentiary documents.

3. The matter was heard on 1 May 2017 and 4 August 2017.

4. The Applicant appeared in person. The First Respondent was represented by Mr Chiodo, by telephone. The Second Respondent was represented by Mr Sealie.

Jurisdiction

5. In accordance with the Civil and Administrative Tribunal Act 2013 and the Fair Trading Act 1987, the NSW Civil and Administrative Tribunal, (“the Tribunal”), has jurisdiction to hear and determine an application by a consumer for determination of a consumer claim. A “consumer claim” means a claim by a consumer for a remedy, including the payment of a specified sum of money, that arises from a supply of goods or services, by a supplier in the course of a business, to the consumer.

6. The Applicant, (“Mr Armstrong”), entered into an agreement with the Second Respondent, (“Hinterland Caravans”), on 8 February 2015, for the supply of an Atlantic “New Generation” caravan, for a price of $73,500.00. The caravan was supplied to Mr Armstrong on 22 July 2015, in the course of Hinterland Caravan’s business. The First Respondent, (“Atlantic Caravans”), is the manufacturer of the caravan.

7. Mr Armstrong alleges that the caravan supplied to him is not fit for the specified purpose of being able to carry a load of at least 700 kg and is not of acceptable quality. He seeks an order that Atlantic Caravans and Hinterland Caravans pay him a specified sum of money, namely $80,091.05, being a refund of the purchase price, ($73,500.00) plus expenses. He also seeks an order that Atlantic Caravans and Hinterland Caravans pay him damages of $300.0 per week from the date of delivery until the date of settlement of this case, being costs of rent and loss of income from superannuation.

8. The contract to which the claim relates was made in New South Wales and the goods were supplied at Morisset, NSW.

9. The amount of the claim is within the monetary jurisdictional limit of the Tribunal in relation to the supply of a new motor vehicle.

10. The application was made within three years of the supply of the goods, as required by the Fair Trading Act 1987.

11. The Tribunal has jurisdiction to hear and determine the application.

Evidence for the Applicant

12. Mr Armstrong took an oath to tell the truth and presented his case.

13. The following documents were received as evidence:

1. Folder of documents filed on 5 January 2017;

2. Folder of documents filed on 30 May 2017;

3. Additional documents filed on 19 July 2017.

14. Mr Armstrong gave oral evidence in support of his application.

15. Mr Colin Young, an automotive and mechanical engineer, gave evidence in the Applicant’s case, via telephone.

16. Mr Armstrong sought a full refund of the purchase price paid, plus expenses and damages, because he believes that Hinterland Caravans breached the contract by failing to provide him with a caravan with a load carrying capacity of 700 kg; because warranty issues have not been attended to in a timely manner; because the caravan supplied was not in accordance with the sample; and because the caravan is a “lemon” – it has a large number of defects that add up to a major failure to comply with the Australian Consumer Law (NSW).

Evidence for the First Respondent

17. Mr Chiodo presented the case for Atlantic Caravans by telephone.

18. Atlantic Caravans did not file any evidentiary documents.

19. Atlantic Caravans did not inspect the caravan prior to the hearing.

20. Atlantic Caravans did not provide an independent expert report as to the condition of the caravan.

21. Mr Chiodo stated that the Applicant’s caravan has one-piece flooring and that Atlantic Caravans were more than happy to rectify the appearance of the chassis within the one-year warranty period.

22. Mr Chiodo submitted that Atlantic Caravans always make good any major or minor defects in their caravans, within the relevant warranty period. Atlantic Caravans have good quality control and are legally audited. Atlantic Caravans have the highest standards, as many customers would attest. Recently, Atlantic Caravans celebrated their 1000th van, capping a successful seven years of manufacturing.

Evidence on behalf of the Second Respondent

23. Mr Sealie gave affirmed evidence on behalf of Hinterland Caravans.

24. A folder of documents was admitted into evidence on behalf of Hinterland Caravans.

25. Mr Sealie stated that the majority of the defects with the caravan have been fixed. Most of the defects were of a very minor nature.

26. Mr Sealie gave evidence that the van is “structurally spot on”. If there are any remaining defects, Hinterland Caravans is willing to repair them.

27. Mr Sealie stated that Hinterland Caravans has “attempted to do everything to keep Mr Armstrong happy”. There is no evidence of failure. Most of the issues were minor items, which could have been solved with minor maintenance.

28. Mr Sealie said that the caravan does have a 700 kg payload. That is “etched in granite”. The issue of the flooring has been “put to bed”. The caravan supplied to Mr Armstrong is of high quality. Hinterland Caravans always takes care of its customers.

29. Hinterland Caravans did not provide an independent expert report concerning the caravan.

THE DECISION

Background

30. On 8 February 2015, the consumer, Mr Armstrong, agreed to purchase goods, namely an Atlantic Caravan, from the supplier, Hinterland Caravans.

31. The caravan was a new, twenty foot, “New Generation” model.

32. The price of the caravan was $73,500.00.

33. Mr Armstrong took delivery of the caravan on 22 July 2015.

34. On 13 August 2015, Mr Armstrong sent Hinterland Caravans an e-mail outlining 30 allegedly defective items with the caravan. Hinterland Caravans attended to the list of items, at no cost to Mr Armstrong.

35. On 12 October 2015, Mr Armstrong sent Hinterland Caravans an e-mail listing 54 allegedly defective items. Hinterland Caravans attended to the list of items, at no cost to Mr Armstrong.

36. On 22 September 2016, an Automotive Inspective from the NSW Department of Fair Trading sent the following email to Hinterland Caravans:

“As discussed on the phone, the customer is very unhappy with the standard of construction of his caravan.

Inspected Caravan at C residence for defects as per owners list of 54 items.

I worked my way through the list with the Customer. The following were found to require further rectification some of which are very minor.

1. TV reception. Aerial problem.

2. External Sat Nav plug fitted into wall C wants it to come from ceiling.

3. Dirt/mould in silicon sealer around dump box door.

4. Seat Trim minor crease (Do nothing with it)

5. Auto locking device on RH seat foot rest out of alignment (Minor)

6. The “A” frame boot still leaks.

The main items I located were

1. Main Chassis has a number ATL 15033. The secondary chassis has a number 15179. Why the two different numbers?

2. The floor supports have been cut off the chassis to allow fitment of tyre mount under van. There are grind marks in the actual chassis where these cross members have been removed.

(Emphasis added by Tribunal).

3. Reported water leak through ceiling light.

4. The interior Draws and cupboards are poorly assembled uneven gaps and in some cases jamming. This is probably the worst cosmetic problem.

5. There is great confusion over the GVM. The plate stated Tare 2248 kg. GTM 2793 and ATM 2958 kg. Which means according to the Plate the vehicle has a payload of 545 kg. This differs from the registration documents.

The Customer has had an Engineer inspect the chassis, refer report attached.

Customer seeking a refund of purchase price under the Australian Consumer Law as he believes the van is not fit for purpose.”

37. Hinterland Caravans replied to the Fair Trading Motor Vehicle Inspector by email on 5 October 2016. The email stated:

“In the interest of settling this situation with Mr. Armstrong, we would be prepared to perform the following.

1. Inspect and test the TV reception and rectify if required, please understand this problem has been inspected on two prior occasions with no faults found, the location of the van at Brunkerville has the Watagan ranges in direct reception line so reception at this location is never going to be good. Mr Armstrong is aware of this.

2. This fitting is an Explorer plug, on every caravan brand it is located through the wall to minimise leaks, we will look at some alternatives.

3. We have cleaned this previously, but will remove the hatch, clean old sealant off and reseal and fit.

4. Consider this to be wear and tear.

5. Realign foot rest mechanism.

6. This has been resealed previously, we will inspect and reseal as required.

1 & 2. Cannot assist with chassis items as we are not qualified chassis repairers.

(Emphasis added by Tribunal).

3. Trace and seal ceiling light water leak.

4. All draws and cupboards to be adjusted.

5. My understanding is that the payload is the difference between tare (2248 kg) and ATM (2958kg) payload being 710 kg. GTM is ATM less tare ball weight. The weights on the registration certificate will always differ because the specification plate weights are dry weights at factory before water and gas testing, under NSW law a vehicle must have a Commonwealth weigh bridge certificate and an authorised brown slip to enable registration, the weigh bridge certificate is effected after water and gas testing, so there is a small amount of water and gas present during the weighing.”

38. Mr Armstrong declined Hinterland Caravan’s offer to rectify the matters as set out in the above email and made an application to the Tribunal, seeking an order that Hinterland Caravans refund the purchase price paid for the caravan, plus expenses.

39. The Tribunal was provided with a report from Ron May Automotive Services dated 7 September 2016. Mr May is a licensed Engineering Certifier, appointed by NSW Roads and Maritime Services. He is also a former Engineering Signatory for the RAWS imported vehicle scheme under the Federal Department of Transport and Regional Services. Mr May inspected Mr Armstrong’s caravan, with particular regard to making an assessment of the structural integrity of the chassis.

40. Mr May reported that the vehicle is a 2015 Atlantic New Generation, tandem-axle caravan. The chassis design is a conventional perimeter frame, with an A-frame draw-bar. Mr May noted that:

“Particular attention was paid to frame section forward of the axle group where it was noted that severe undercutting into the chassis had occurred where cross rails had been removed by angle grinding. This is evidenced by application of different paint in the area in question to the rest of the frame.

Also the grinding process has exposed excessive weld penetration resulting in “blow through” on several frame members. This work appears to have been undertaken in an attempt to relocate the spare wheel carrier forward in the chassis at some stage during manufacture. A section of RHS cross rail where the carrier was cut and moved forward and has not been replaced and may give rise to reduced chassis integrity beyond that designed by the external supplier of the chassis.

Additionally the grinding appears to have reduced the overall thickness of the member and in the absence of performing a torsion and beaming test and x-ray examination of the sections affected it must be assumed that structural integrity has been reduced requiring additional re-inforcement needing to be added to rectify the issue. The cutting and grinding and resultant holes in the frame create a potential for premature corrosion of the frame.

Further issues were observed as follows:

Holes were drilled into members through which passed plastic tubing. These holes were left with rough edges and burring and no protective grommets.

This results in non-compliance with the general safety provisions of the Australian Design Rules and is indicative of poor engineering practice.

Further cause for non compliance concerns is the absence of the ADR marking on the indicator lights on the rear of the vehicle. Cracks to the lenses around the screw will lead to failure during an annual registration inspection.

The paint on the axles is severely flaking and increases the risk of corrosion of the axle. Pinholes exist in several of the welds on the frame and whilst indicative of standard engineering practice for construction of caravans and trailers steps should be taken to apply a protective coating capable of ensuring a point where corrosion may start is eliminated.

The relocation of the spare wheel carrier forward and the addition of a large tool box on the front of the van resulting in moving the gas bottles forward raises concern that the manufacturers ball weights both at tare and fully laden will be exceeded creating the potential for unstable handling and draw bar structural failure.

The cable for activation of the park brake system is rubbing on the frame rail and will suffer premature wear or cause the frame rail to wear. This is not compliant with the relevant Australian Design Rule.

Overall the frame of the vehicle appears to be soundly constructed and it appears to have been interfered with during the van construction and fitout resulting in the issues raised. The overall standard of the van construction from the underbody perspective should be considered as indicative of poor engineering practice.”

41. The Tribunal was provided with a copy of a letter from Mr Shane Felk, of Felk Engineering Pty Ltd, dated 16 December 2016. Mr Felk is a trailer designer and manufacturer, motor mechanic, metal fabrication engineer, licensed RMS body maker and E-safety examiner.

42. Mr Felk stated that:

“After examination of the above Caravan two sections of the support cross members have been cut and removed from the main chassis leaving deep cut marks. These cut marks will need to be filled to re-strengthen the main chassis and four new cross members will have to be installed to support the water tank & spare wheel. This will take approximately 5 hours to repair plus materials (approx. $680.00).”

43. Hinterland Caravans are prepared, without admission of liability, to engage Felk Engineering to fill the cut marks and re-strengthen the main chassis by installing four new cross-members.

44. The Tribunal was provided with a copy of a report from Mr Colin G Young, dated 24 May 2017. Mr Young is a qualified Mechanic, Automotive Engineer and Mechanical Engineer. He is also a qualified Quality Auditor, as per the requirements of the Federal Office of Road Safety.

45. Mr Young examined documents and photographs provided to him by Mr Armstrong and prepared a report for the Tribunal. The following was included in Mr Young’s report:

“The subject caravan’s structural integrity has been appreciably weakened by having a number of its chassis steel members removed. The chassis has clearly not been designed for this specific caravan, and accordingly has had these reinforcing members cut out, in order to facilitate the installation of equipment, appliances, and associated plumbing and wiring.

Along with reducing the supporting of the caravan floor, and reducing the rigidity of the chassis, the original chassis-factory corrosion-resistance of the chassis has been impaired.

It is my considered opinion that the vehicle is not of “acceptable quality”, in that its structural integrity – and expected service-life – have been appreciably impaired.

It is my considered opinion that the vehicle is not of professional design and manufacture, and not in accordance with recognised engineering and quality-assurance practices.”

46. Mr Young deemed the issues with the caravan to be “Major Failures”.

47. Mr Young gave evidence that the structural integrity of the chassis was “drastically impaired”. The chassis has been “hacked around” and cross- members have been cut out. He described the work as “very poor engineering”. Mr Young stated that the strength of the original chassis can never be restored.

48. Mr Young stated that “any potential buyer would be put off by what was done to the chassis”. The design of the caravan has been “compromised and impaired”. There is no re-engineering certificate. The corrosion protection has been compromised and cannot be restored. Mr Young stated that he himself would not accept a caravan with such alterations to the chassis. He said that the welding was “very, very poor” and “unprofessional” in finish.

49. Mr Young stated that the defect in the chassis was both structural and cosmetic and the caravan was, as a result, not of acceptable quality.

Australian Consumer Law (NSW)

50. Section 54 of the Australian Consumer Law (NSW), “ACL (NSW)”, is in the following terms:

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 qualityif 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; and

(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.

51. The Tribunal finds that the caravan was supplied to Mr Armstrong in trade and commerce.

52. The Tribunal finds that Mr Armstrong is a consumer, within the meaning of the ACL (NSW), as the goods were of a kind ordinarily acquired for personal, domestic, or household use or consumption.

53. The supply did not occur by way of sale by auction.

54. In accordance with Section 54 of the ACL (NSW), there is a guarantee that the caravan is of acceptable quality.

Was the caravan of acceptable quality when it was supplied to the consumer?

55. The Tribunal finds that the caravan supplied to Mr Armstrong was not free from defects on the date it was delivered to him.

56. The Tribunal finds that the most significant defect was the severe undercutting into the chassis, where cross-rails had been removed by angle grinding, thereby reducing the structural integrity and expected service-life of the chassis.

57. The Tribunal finds that no examination that Mr Armstrong may have made of the caravan on the delivery date would have revealed that defect.

58. There were no reasons as to why the caravan may not have been of acceptable quality specifically drawn to Mr Armstrong’s attention before he agreed buy it.

59. There were no reasons as to why the caravan may not have been of acceptable quality disclosed on a written notice that was displayed with the caravan.

60. There is no evidence that Mr Armstrong caused the caravan to become of unacceptable quality, or failed to take reasonable steps to prevent it from becoming of unacceptable quality.

61. There is no evidence that the caravan was damaged by abnormal use.

62. The question of whether or not goods are of acceptable quality is to be determined as of the date when the goods were supplied to the consumer. However, the determination of what a reasonable consumer fully acquainted with the state and condition of the goods, (including any hidden defects of the goods,) would regard as acceptable must include a consideration of all of the relevant information available at the time of the hearing, including information about the goods that was not known at the time the goods were supplied.

63. The Tribunal has had regard to the nature of the goods, the price of the goods and all other relevant circumstances, including the kind of defects, and the periods of use of the goods before the defects presented.

64. The caravan was a new caravan, purchased for a cost of $73,500.00, which is a substantial sum. A reasonable consumer would expect good quality for this price. Many defects became apparent within the first three weeks after supply. More defects became apparent within the first three months after delivery. The most significant defect, the interference with the structural integrity of the chassis by the removal of a cross-rail, became apparent when the caravan was inspected by Mr May, within 14 months of delivery.

65. When the serious issue with the chassis was raised with Hinterland Caravans by the NSW Fair Trading Automotive Inspector, Hinterland Caravans stated that they “Cannot assist with chassis items as we are not qualified chassis repairers.” (Emphasis added).

66. The Tribunal considers that the defect with the chassis was a serious defect. Although the other defects were not as significant, the totality of all of the defects is substantial and of concern.

67. Taking into account all of the circumstances of the case, the Tribunal finds that the caravan supplied by Hinterland Caravans to Mr Armstrong was not of acceptable quality, because it was not free from defects, on the date it was supplied, as a reasonable consumer, fully acquainted with the state and condition of the caravan, (including any hidden defects), would regard as acceptable. Therefore, the caravan did not satisfy the requirements of the consumer guarantee as to acceptable quality set out in 54(2)(c) of the ACL (NSW).

Was the failure to comply with the guarantee as to acceptable quality a major failure?

68. Mr Armstrong submitted that there has been a major breach of obligation under the ACL (NSW) to attend to warranty issues in a timely manner. Owing to the number of faults, omissions, poor quality presentation, poor quality inclusions and the existence of ongoing faults, Mr Armstrong believes that the “Lemon Law” applies in this instance. Mr Armstrong stated that, had he known that the caravan was going to be presented in this manner, he would not have purchased it in the first place. Mr Armstrong believes that the large number of failures constitutes a “Major Failure” in terms of the ACL (NSW).

69. Section 259 of the ACL (NSW) relevantly provides:

(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 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.

70. 70   Section 260 of the ACL (NSW) sets out the alternative tests for determining whether a failure to comply with a consumer guarantee is major:

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 on one or two 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;

(ii) or 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.

71. The test of whether a failure to comply with the guarantee of acceptable quality is a major failure is an objective one.

72. Within three weeks of delivery of the caravan, Mr Armstrong sent an e-mail to Hinterland Caravans listing 30 allegedly defective items. These items were attended to by Hinterland Caravans, at no cost to Mr Armstrong.

73. Within three months of delivery of the caravan, Mr Armstrong set an e-mail to Hinterland Caravans listing 54 allegedly defective items. These items were attended to or explained by Hinterland Caravans, at no cost to Mr Armstrong.

74. The Tribunal finds that the caravan has a major defect with its chassis. There has been severe undercutting into the chassis, including the removal of cross-rails by angle grinding. The grinding process has exposed excessive weld penetration, resulting in “blow-through” on several frame members. A section of cross-rail on the right-hand side of the caravan, where the carrier was cut and moved forward, has not been replaced and may give rise to reduced chassis integrity beyond that designed by the chassis supplier.

75. Additionally, the grinding appears to have reduced the overall thickness of the structural chassis member. The cutting, grinding and resultant holes in the frame have created a potential for premature corrosion of the frame.

76. The Tribunal finds that the undercutting into the chassis and removal of structural cross-rails occurred prior to the delivery of the caravan to Mr Armstrong.

77. The Tribunal finds that the caravan also has a number of other defects, including:

1. Water ingress through a ceiling light.

2. Interior drawers and cupboards that have been poorly assembled, with uneven gaps and are prone to jamming.

3. Water ingress into the “A” frame boot.

78. The Tribunal finds that Hinterland Caravans offered and is prepared to repair those defects, at no cost to Mr Armstrong.

79. The ACL (NSW) provides that if a reasonable consumer, fully acquainted with the nature and extent of the defects, would not have acquired the caravan, the failure to comply with the consumer guarantee as to acceptable quality will be considered to be a “major failure”.

80. In “Australian Consumer Law Commentary and Materials”, (Fourth Edition), Corones and Clarke state at page 476:

“In relation to s260(a), the matters that a reasonable consumer would take into account include:

• how soon the fault developed after supply: the shorter the time the more serious the fault;

• the price of the goods: the more expensive the goods, the less acceptable is any fault;

• any representations made about the goods by the supplier or manufacturer, either orally or in the advertising or packaging;

• any other faults with the goods: a number of small faults may not be serious, but their cumulative effect may be major.”

81. The Tribunal finds that there were a significant number of defects in the caravan on the date that it was supplied to Mr Armstrong. There are still a number of significant defects in the caravan, the most serious of which is the undercutting into the chassis and the removal of structural cross-rails.

82. The Tribunal finds that the chassis of the caravan has been altered, compromised, weakened and impaired. There is no re-engineering certificate. The Tribunal is of the opinion that, due to the structural alteration of the chassis, any warranty provided by the chassis manufacturer would probably be void. The corrosion protection has been compromised.

83. The Tribunal accepts the evidence of the expert witness, Mr Young, who stated that “any potential buyer would be put off by what was done to the chassis”. (Emphasis added).

84. Mr Young stated that he himself would not accept a caravan with such alterations to the chassis. He said that the engineering was “very poor”.

85. The Tribunal finds that the structural integrity of the chassis of the caravan supplied to Mr Armstrong is seriously and detrimentally compromised. The Tribunal is of the view that structural integrity is one of the main factors that reasonable consumers would take into account when purchasing a caravan, particularly a new caravan. The Tribunal is also of the view that any alteration of the chassis, particularly the removal of cross-rails, should be brought to the attention of the consumer prior to sale.

86. The Tribunal finds that the caravan would not have been acquired by a reasonable consumer, fully acquainted with the nature and extent of the failures, particularly the significant alteration of the chassis, including the removal of cross-rails and poor quality welding.

87. The Tribunal is satisfied that the failure to comply with the consumer guarantee of acceptable quality is a major failure.

Is the consumer entitled to a refund?

88. As the failure to comply with the consumer guarantee of acceptable quality is a major failure, Mr Armstrong was entitled under the ACL (NSW) to notify Hinterland Caravans that he rejected the caravan and the grounds for his rejection. Mr Armstrong was then required to return the goods to Hinterland Caravans, in accordance with Section 263(2) of the ACL (NSW).

89. On 22 September 2016, the NSW Fair Trading Automotive Inspector advised Hinterland Caravans by email that Mr Armstrong was seeking a refund of the purchase price under the ACL (NSW), on the grounds that the caravan had numerous defects and was not fit for purpose.

90. Hinterland Caravans declined to give Mr Armstrong a refund and offered to repair some of the defects. However, Hinterland Caravans was not prepared to repair the chassis, as they are not a qualified chassis repairer.

91. On 7 November 2016, Mr Armstrong filed this application for an order by the Tribunal. He sought a refund of the purchase price of the caravan. He specified the grounds for seeking a refund in the application.

92. The Tribunal finds that Mr Armstrong notified Hinterland Caravans of his rejection of the goods and the grounds for his rejection of the goods. The Tribunal finds that Mr Armstrong was willing to return the goods to Hinterland Caravans, if Hinterland Caravans agreed, or was ordered to pay him, a refund.

93. The grounds required to make an order that Hinterland Caravans refund Mr Armstrong the purchase price of the caravan have been established.

Consequential loss and damage

94. Section 259(4) of the ACL (NSW) provides that a 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 of acceptable quality, if it was reasonably foreseeable that the consumer would suffer loss or damage as a result of such a failure.

95. 95   Mr Armstrong sought to recover damages for expenses associated with the caravan, being $6,591.05, (as set out in Schedule RA 3), plus $300.00 per week from the date of delivery of the caravan, to the date of settlement of the application, to offset rental costs and the loss of unearned income from superannuation, used to purchase the caravan.

96. 96   After carefully considering all of the evidence and the submissions, the Tribunal finds that Mr Armstrong is entitled to recover damages against Hinterland Caravans for the following:

1. The cost of the inspection and expert report provided by Ron May ($330.00);

2. The cost of the inspection and report provided by Felk Engineering ($200.00);

3. The cost of the expert report provided by Colin Young ($600.00);

4. The cost of registering the caravan on 21 July 2017 ($478.00).

97. In accordance with Section 60(1) of the Civil and Administrative Tribunal Act 2013, each party to the proceedings is to bear their own costs. The claim for the cost of filing the application, printer, printer cartridges and ink, business name search, company search, printer cable, printing of photographs, stationery and postage, falls within this category of costs. The Tribunal considers that the parties in this matter should bear their own costs. The Tribunal is not satisfied that there are exceptional circumstances warranting an award of costs.

98. The claim for $1,302.05, being the cost of GIO insurance incurred on 12 August 2017, has not been established. The Tribunal finds that Mr Armstrong has had some benefit from the insurance policy and he will be entitled to a pro-rata refund upon cancellation.

99. The claim for damages in the sum of $300.00 per week, from the date of delivery of the caravan, until the date of settlement of this case, has not been established. The Tribunal considers that the Applicant’s evidence in support of this claim is insufficient. The Applicant has not established the grounds required to make this order. Further, the Tribunal considers the alleged losses to be too remote from the breach of the ACL (NSW) in this instance. Also, there is no evidence that the Applicant mitigated these losses.

Is the consumer entitled to an award of damages against the manufacturer?

100. Section 271(1) of the ACL (NSW) provides that, if the guarantee of acceptable quality is not complied with, an affected person in relation to the goods may, by action against the manufacturer of the goods, recover damages.

101. Section 272(1)(b) of the ACL (NSW) provides that a manufacturer can be ordered to pay damages to a consumer for any losses that were reasonably foreseeable as a result of the failure to comply with the consumer guarantee of acceptable quality.

102. The Tribunal is satisfied on the balance of probabilities that the defects in the caravan were manufacturing defects, especially the most serious defect, the undercutting of the chassis and removal of the structural cross-rails.

103. The Tribunal is satisfied that it is appropriate to make an award of damages in favour of Mr Armstrong against Atlantic Caravans.

104. The Tribunal finds that the supplier and the manufacturer are jointly and severally liable to pay the consumer a refund, plus damages for consequential loss.

Conclusion

105. The Tribunal finds that the caravan was not of acceptable quality when it was supplied to Mr Armstrong, because it had a number of defects.

106. The Tribunal finds that the failure to comply with the consumer guarantee of acceptable quality was a major failure, as the Tribunal is satisfied that the caravan would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure.

107. The Tribunal finds that Mr Armstrong advised Hinterland Caravans that he rejected the caravan and the reasons for his rejection, and requested a refund.

108. The Tribunal finds that Mr Armstrong is entitled to a refund of the purchase price and to consequential damages.

109. As the Tribunal is satisfied that the defects were manufacturing defects, the consumer if entitled to an award of damages against the manufacturer, Atlantic Caravans.

110. The Tribunal orders the supplier and the manufacturer, jointly and severally, to pay the consumer a refund of the purchase price of the caravan, plus damages for the consequential losses that have been established on the evidence.

111. Having made these findings, it is not necessary for the Tribunal to decide the other issues raised by Mr Armstrong, including whether Hinterland Caravans breached the contract by failing to provide him with a caravan with a load- carrying capacity of at least 700 kg; or whether the caravan supplied was not in accordance with the sample shown at the Caravan and Camping Show.

D Moss

General Member

Civil and Administrative Tribunal of New South Wales

22 September 2017

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

Decision last updated: 22 November 2017