Chen v Homeland Furniture Canterbury Pty Ltd

[2015] NSWCATCD 102

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:	Chen v Homeland Furniture Canterbury Pty Ltd [2015] NSWCATCD 102
Hearing dates:	3 August 2015
Decision date:	26 August 2015
Jurisdiction:	Consumer and Commercial Division
Before:	G J Sarginson, General Member
Decision:	1. The application is dismissed.
Catchwords:	Misleading or deceptive conduct Acceptable quality Sale by sample or demonstration model Mitigation of loss
Legislation Cited:	Consumer Claims Act 1998 ss 3, 3A, 7 Fair Trading Act 1987 s 28 Australian Consumer Law 2010 ss 18, 54, 57, 259, 260, 261, 262
Cases Cited:	Perpetual Trustee Company Limited & Anor v Ishak [2012] NSWSC 697 Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1 Miller & Associates Insurance Broking v BMW Australia Finance (2010) 241 CLR 357 Clark v Macourt (2013) 304 ALR 220 Chand v Commonwealth Bank of Australia [2015] NSWCA 181
Category:	Principal judgment
Parties:	Ping Chen (applicant) Homeland Furniture Canterbury Pty Ltd (respondent)
Representation:	Applicant: In person Respondent: Mr Zhou, Manager
File Number(s):	GEN 15/31076
Publication restriction:	Unrestricted

REASONS FOR DECISION

1. The matter was listed for hearing at the Tribunal in Liverpool on 3 August 2015. The applicant appeared with a Mandarin interpreter, and gave sworn evidence. The applicant’s husband also appeared at the Tribunal and gave sworn evidence. Mr Zhu, manager of the respondent, appeared and gave sworn evidence.

2. The application was filed with the Tribunal on 23 April 2015. The matter was listed before the Tribunal on 5 June 2015 when it was set down for hearing, and orders made that each party file and serve documentary evidence. Each party had filed and served documentary evidence in accordance with the directions of the Tribunal, and such documents were admitted into evidence.

3. The dispute involves a leather lounge suite (comprising of a 3 seater lounge and 2 chairs) that the applicant purchased from the respondent on 2 April 2015 for $2,130.00. The applicant seeks an order for return of the goods and a full refund, on the basis that the goods were advertised by the respondent as “100% genuine leather” when the goods were not “100% genuine leather”.

4. There are a number of facts that are not in dispute. There is no dispute that the applicant attended the respondent’s store and inspected a display model of the lounge suite; that there was a discussion between the applicant and a salesperson; that the lounge suite the applicant inspected was a “Risque” model lounge suite; and that there was a sign on the display lounge suite stating that it was “100% genuine leather”. Further, there is no dispute that the applicant paid the respondent $2,130.00 (the agreed price of the lounge suite, inclusive of delivery cost) on 2 April 2015, and that the respondent arranged for the delivery of a “Risque” model lounge suite (in the same colour as the model inspected at the respondent’s store) to the applicant’s residence.

APPLICANT’S DOCUMENTS

5. The applicant relied on the following documents:

1. Statutory declaration of the applicant dated 23 June 2015;

2. Expert report of Mr Dean Sousanis, of ‘The Leather Doctor’ dated 9 June 2015;

3. Tax invoice of the respondent dated 2 April 2015;

4. Photographs of a display “Risque Lounge Suite” (including a sign advertising the lounge suite as “100% genuine leather” taken by the applicant at the respondent’s store on 9 April 2015. The applicant asserts the sign is exactly the same as the sign displayed on 2 April 2015;

5. A brochure of Ashley Furniture Homestore;

6. Photographs of the lounge suite delivered by the respondent, and the packaging of the suite when delivered.

APPLICANT’S EVIDENCE

6. The applicant’s evidence was that she attended the respondent’s store on 2 April 2015, and spoke to a salesperson about the “Risque” lounge suite. She states that the lounge suite was advertised by a sign on the lounge suite as “100% genuine leather”. The applicant stated that the salesperson she spoke to said that the lounge suite was “good quality leather, with some parts of lesser quality, but all genuine leather”.

7. When the lounge suite was delivered on 9 April 2015, the applicant stated that the one of the armrests didn’t match the rest of the lounge (the left side armrest of one of the reclining chairs); there was a “hole” in the rear of the 3 seater lounge; and that backs of the lounge and chairs, and sides of the lounge were of different material, being “hard” and were not of the same quality as the lounge that she saw on display.

8. The applicant stated that she complained to the respondent, and went back to the respondent’s store on 9 April 2015. A representative of the respondent offered to fix the armrest. However, the applicant informed the respondent she did not want the armrest fixed and believed she had been misled because the lounge suite was not “100% leather”. The applicant told the respondent she wanted them to accept return of the goods and provide a full refund. The respondent refused.

9. The applicant stated that the lounge suite is in the upstairs of her house and “has not been used much” since purchase. She stated that only she and her husband live in the house.

10. According to the applicant, she would never have purchased the lounge suite if she knew that it was not “100% genuine leather”.

APPLICANT’S EXPERT EVIDENCE

11. The report of Mr Sousanis, (who does not state his qualifications, but presumably is an upholsterer) states that he inspected the lounge suite at the applicant’s residence and found that the “head rest/Back/lumbar support; seat base; leg roll; top panels on arm rest/1x panel under the arm rest” are “leather directly from a leather hide” and “the rest of the covering is split leather. The areas are, sides of the armrest, the sides of the head rest panel, the complete back rest panel, and foot rest”.

12. Mr Sousanis further states: “This is the definition of split leather. Split leather is leather created from the fibrous part of the hide left once the top grain of the rawhide has been separated from the hide. During the splitting operation, the top grain and drop split are separated. The drop split can be further split (thickness allowing) into a middle split and a flesh split. In very thick hides the middle split can be separated into multiple layers until the thickness prevents further splitting. Split leather then has an artificial layer applied to the surface of the split and is embossed with a leather grain. As per the definition of split leather, an artificial layer is added and the top layer is embossed to create leather grain. The two materials have a completely different feel and texture. Based on what he customer advises me, she was sold 100% full hide leather. She was never told about the differences in the two materials”.

RESPONDENT’S EVIDENCE

13. The respondent relied upon the following documents:

1. A signed (although unsworn) written statement of Mr Nino Calandra, store manager of the respondent’s Bankstown store, dated 15 July 2015;

2. A “test report” by Bureau Veritas dated 5 June 2015, which the respondent asserts is a test of the leather batch of the manufacturer used to make the ‘Risque’ model lounge suite;

3. An extract from “Studio Leather and Fabrics Information Kit” which the respondents asserts sets out the various industry definitions of different leather types, including “full grain leather” and “split leather”;

14. The statement of Mr Calandra asserts that he was the salesperson who spoke to the applicant and sold her the ‘Risque’ leather lounge suite. Mr Calandra states he has worked in the furniture retail industry for 21 years. Relevantly Mr Calandra states that he showed the applicant a number of lounges, and the applicant asked “Are these lounges leather?” Mr Calandra replied: “Yes, all our lounges are 100% leather”. Mr Calandra states that after the applicant decided she wanted to purchase the ‘Risque’ lounge suite, there were negotiations about the price, but he denies that he ever told the applicant that the lounge suite was “100% full grain leather”.

15. According to Mr Calandra, “split grain leather” is genuine leather, because it is taken from the cow hide. “Full grain” or “top grain” leather is taken from the top of the cow hide, and “split grain” is taken from the remaining layers of the cow hide. Mr Calandra asserts that in his experience, it is the industry practice to advertise lounges that are a mixture of “top grain” and “split grain” leather as “100% leather”, and that lounges that are “Full grain leather” are a “much more premium product” which usually retail for more than twice the price of the lounge suite the applicant purchased.

16. Mr Zhou’s evidence regarding the difference between “split grain leather” and “full grain leather” was consistent with the assertions of Mr Calandra (i.e. that it is standard industry practice to advertise lounges that comprised of both top grain leather and split grain leather as “100% genuine leather”; and that lounge suites that are entirely made of full grain leather are much more expensive). Mr Zhou accepted that one of the chairs had two left sided armrests, but stated that this was easily rectified and the respondent had offered to do this, which the applicant had rejected. Mr Zhou also stated that the applicant made no mention of any hole in the rear of the lounge suite when the issues were discussed on 9 April 2015, or subsequently.

JURISDICTION

17. The applicant is a “consumer” within the meaning of Section 3 of the Consumer Claims Act 1998 (‘the CCA’) and the matter is a “consumer claim” within Section 3A of the CCA. The proceedings have been brought within the relevant limitation period of Section 7(4) of the CCA. The Tribunal has jurisdiction.

RELEVANT LAW

18. The relevant legal principles in this dispute are contained in the Australian Consumer Law 2010 (‘the ACL’). By reason of Section 28 of the Fair Trading Act 1987, the ACL is part of the law of NSW.

19. The relevant provisions are as follows:

1. Section 18 of the ACL: Conduct which is misleading or deceptive, or likely to mislead or deceive;

2. Section 57 of the ACL: Guarantees relating to the supply of goods by sample or demonstration model;

3. Section 54 of the ACL: Guarantee as to acceptable quality.

APPLICATION OF LEGAL PRINCIPLES TO FACTS

20. The central aspect of the dispute is the applicant’s assertion that she was sold a lounge suite that was not “100% genuine leather”, despite it being advertised as such. Accordingly, the salient provision to consider is Section 18 of the ACL.

21. The legal principles pertaining to Section 18 of the ACL are summarised by Brereton J in Perpetual Trustee Company Limited & Anor v Ishak [2012] NSWSC 697 at paras [75]-[76]. Relevantly, the test is objective (i.e. what a reasonable consumer in the position of the applicant would have, in all the circumstances of the matter, been misled or deceived, not whether the applicant subjectively believed that the conduct of the respondent was misleading or deceptive). There does not have to be any intention on the part of the respondent to mislead or deceive. Confusion or misunderstanding by a consumer does not mean, of itself, that the conduct in question is misleading or deceptive, and a consumer failing to make reasonable inquiries is relevant in assessing whether conduct is misleading or deceptive in contravention of Section 18 of the ACL (Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1; Miller & Associates Insurance Broking v BMW Australia Finance (2010) 241 CLR 357).

22. The Tribunal is not satisfied the applicant has proved on the balance of probabilities that the respondent breached Section 18 of the ACL in respect of the representation that the lounge suite was “100% genuine leather”. The expert report of Mr Sousanis does not assert that split grain leather is not a type of leather. Rather, his report is consistent with a conclusion that spit grain leather is a type of leather, and that in circumstances where the lounge suite was constructed of a combination of full grain leather and spit leather it was not misleading or deceptive to advertise the lounge suite as “100% genuine leather”, nor for Mr Calandra to describe the lounge suite in such a way when speaking to the applicant. The lounge suite was never advertised, nor is there any evidence it was represented by Mr Calandra, as being “100% full grain leather”.

23. Further, the oral evidence of the applicant that Mr Calandra told her that the lounge suite was made of “good quality leather and some parts of lesser quality, but all genuine leather” is inconsistent with her asserted belief that the entire lounge suite was constructed of full grain leather. The comments of Mr Sousanis that “based on what the customer advises me” the applicant was sold a “100% full hide leather” lounge suite and “was never told about the differences in the two different materials” cannot be given any weight, because the key information is the evidence from the applicant and Mr Calandra about what was actually said prior to purchase, in the context of the advertisement that the lounge suite was “100% genuine leather”, not what the applicant told Mr Sousanis in retrospect she believed she had been told about the material the lounge suite was constructed of. Further, there is nothing in the report of Mr Sousanis that sets out what instructions he was given by the applicant.

24. Notwithstanding that the applicant may have genuinely, although mistakenly, believed that the lounge suite was entirely constructed of full grain leather, the Tribunal is not satisfied that such a belief was induced by any conduct of the respondent in breach of Section 18 of the ACL.

25. The Tribunal is not satisfied the applicant has proved to the requisite standard that the respondent breached Sections 54 and/or 57 of the ACL. Although the applicant stated that the lounge suite on display at the respondent’s store was made of “softer” material than the lounge suite delivered, there is insufficient evidence to conclude that the goods delivered did not reasonably match the item displayed. Although the arm rest of one of the chairs was the wrong arm rest (the chair having two left arm rests), the respondent had offered to replace that item, which was rejected by the applicant. Even if the incorrect arm rest constituted a breach of Sections 54 and/or 57 of the ACL, the applicant’s failure to accept the offer of the respondent to replace the arm rest is a clear failure by the applicant to take reasonable measures to mitigate or avoid her loss, by insisting on returning the goods rather than allowing the respondent to conduct a simple repair (Clark v Macourt (2013) 304 ALR 220; Chand v Commonwealth Bank of Australia [2015] NSWCA 181). For the sake of completeness, the Tribunal has also considered the provisions of Sections 259-262 of the ACL, and is not satisfied the goods were sold with a “major defect” within the meaning of those provisions.

26. In respect of the applicant’s assertion that there was a “hole” in the lounge suite, the Tribunal is not satisfied the applicant has proved on the balance of probabilities that the respondent breached Sections 54 and/or 57 of the ACL. There was no photographic evidence of such a hole; it is not referred to in the report of Mr Sousanis; and according to Mr Zhou it was not contemporaneously mentioned to him by the applicant when she complained about the lounge suite and sought a refund.

27. For the above reasons, the application is dismissed.

G J Sarginson

General Member

Civil and Administrative Tribunal of New South Wales

26 August 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

Decision last updated: 08 October 2015