Freestone Auto Sales Pty Ltd v Musulin

[2015] NSWCA 160

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Freestone Auto Sales Pty Ltd v Musulin [2015] NSWCA 160

Hearing dates:

16 February 2015

Decision date:

11 June 2015

Before:

McColl JA at [1]; Ward JA at [2]; Simpson J at [3]

Decision:

(1)  The order of the District Court on 18 December 2013 is quashed;

(2)  The first respondent’s appeal from the Consumer, Trader and Tenancy Tribunal to the District Court is dismissed;

(3)  The first respondent is to pay the applicant’s costs of and incidental to the proceedings in the District Court;

(4)  The first respondent is to reimburse the applicant in the sum of $5132 paid in compliance with the orders of the District Court of 18 December 2013;

(5) The first respondent is to pay the applicant’s costs of and incidental to the proceedings in this Court and have a certificate under the Suitors’ Fund Act 1951 (NSW), if otherwise qualified.

Catchwords:

SUMMONS - Supreme Court Act 1970, s 69 - application to quash decision of District Court - appeal to District Court from Consumer, Trader and Tenancy Tribunal - appeal lies where Tribunal decides a question with respect to a matter of law - District Court erred in law - appeal never properly determined - whether appropriate to remit to District Court - assessment of realistic prospects of success if remitted

MOTOR VEHICLE - vehicle a “repairable write off” - Competition and Consumer Act 2010 (Cth), Sch 2, s 18 and s 54 - conduct of applicant not misleading or deceptive - statutory guarantee as to acceptable quality - remittal to the District Court unlikely to be successful - decision of the District Court quashed - first respondent’s appeal from the CTTT to District Court dismissed

COSTS - success in lower court founded on an erroneous basis - costs awarded to the applicant

Legislation Cited:

Australian Consumer Law, s 18, s 54, s 259(3), s 260
Civil and Administrative Tribunal Act 2013 (NSW), s 67
Competition and Consumer Act 2010 (Cth), Sch 2
Consumer, Trader and Tenancy Tribunal Act 2001 (NSW), s 28(2), s 67(1)
Motor Dealers Act 1974 (NSW)
Personal Property Securities Act 2009 (Cth)
Registration of Interests in Goods Act 1986 (NSW)
Suitors’ Fund Act 1951 (NSW), s 6(1)
Supreme Court Act 1970 (NSW), s 48(2), s 69

Cases Cited:

Allwood v Peter Vivian Benjafield t/as Benjafield & Associates Lawyers [2014] NSWCA 355
Wende v Horwath (NSW) Pty Ltd [2014] NSWCA 170; 86 NSWLR 674

Category:

Principal judgment

Parties:

Freestone Auto Sales Pty Ltd (Applicant)
Tenielle Neda Musulin (First Respondent)
District Court of NSW (Second Respondent)

Representation:

Counsel:
L Livingston (Applicant)
D Murr SC/L Ang (First Respondent)
Submitting appearance (Second Respondent)

Solicitors:
TressCox Lawyers (Applicant)
G I & Sanicki Lawyers (First Respondent)
Crown Solicitor’s Office (Second Respondent)

File Number(s):

2014/109268

 Decision under appeal 

Court or tribunal:

District Court; Consumer, Trader and Tenancy Tribunal

Date of Decision:

DC 18 December 2013
CTTT 29 July 2013

Before:

Curtis DCJ; P R Smith, Member

File Number(s):

DC 2013/252594
MV 2012/49352

Judgment

1. McCOLL JA: I agree with Simpson J’s reasons and the orders her Honour proposes.

2. WARD JA: I agree with Simpson J.

3. SIMPSON J: By Summons filed in the Supreme Court on 17 March 2014 the applicant, Freestone Auto Sales Pty Ltd, seeks relief under s 69 of the Supreme Court Act 1970 (NSW) in relation to a decision of the District Court of 18 December 2013. The Summons names Ms Tenielle Musulin as the first respondent, and the District Court of New South Wales as the second respondent. The second respondent has played no part in the proceedings.

4. The proceeding in the District Court was an appeal by the first respondent, pursuant to s 67(1) of the Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) (“the CTTT Act”) (now repealed) from a decision of the Consumer, Trader and Tenancy Tribunal (“the Tribunal”) given on 29 July 2013 in favour of the present applicant. By s 48(2) of the Supreme Court Act, the proceedings are assigned to this Court.

5. The orders sought in the Summons are:

• that the decision of the District Court of 18 December 2013 be quashed;

• that the proceeding be remitted to the NSW Civil and Administrative Tribunal (“NCAT”) (to which functions formerly assigned to the Tribunal have been assigned - see Civil and Administrative Tribunal Act 2013 (NSW));

• that the applicant’s costs of the proceedings in the Tribunal, the District Court, and this Court be paid by the first respondent; and

• that the first respondent refund an amount of $5132, paid pursuant to the orders of the District Court.

At the hearing of the Summons, the applicant abandoned the claim for remittal of the proceedings to NCAT, and claimed instead an order that the first respondent’s appeal to the District Court be dismissed.

6. The first respondent (to whom I will refer as Ms Musulin) concedes that the decision of the District Court was affected by error and must be quashed. She also concedes that money paid pursuant to the orders must be refunded. She claims, however, an order that the proceedings be remitted to the District Court for further hearing of her appeal.

7. The issues that remain for determination in this Court are:

• whether the proceedings ought to be remitted for further hearing in the District Court; and

• costs.

Facts

8. The applicant (to which I will refer as “Freestone”) trades in second hand motor vehicles. For that purpose, it holds a licence as a motor dealer under the Motor Dealers Act 1974 (NSW). Shaun Freestone is the sole director and managing director of Freestone. His wife, Daniela, works in the business with him.

9. In December 2011 Ms Musulin purchased from Freestone a 2008 Volkswagen motor vehicle for which she paid $31,500 (plus GST). The Australian Consumer Law (“ACL”) (Sch 2 to the Competition and Consumer Act 2010 (Cth)) applied to the purchase.

10. Section 18 of the ACL relevantly provides as follows:

“18  Misleading or deceptive conduct

(1)  A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

(2)  …”

11. Section 54 of the ACL relevantly provides as follows:

“54  Guarantee as to acceptable quality

(1)  If:

(a)  a person supplies, in trade or commerce, goods to a consumer; and

(b)  the supply does not occur by way of sale by auction;

there is a guarantee that the goods are of acceptable quality.

(2)  Goods are of acceptable quality if they are as:

(a)  fit for all the purposes for which goods of that kind are commonly supplied; and

(b)  acceptable in appearance and finish; and

(c)  free from defects; and

(d)  safe; and

(e)  durable;

as a reasonable consumer fully acquainted with the state and condition of the goods (including any hidden defects of the goods), would regard as acceptable having regard to the matters in subsection (3).

(3)  The matters for the purposes of subsection (2) are:

(a)  the nature of the goods; and

(b)  the price of the goods (if relevant); and

(c)  any statements made about the goods on any packaging or label on the goods; and

(d)  any representation made about the goods by the supplier or manufacturer of the goods; and

(e)  any other relevant circumstances relating to the supply of the goods.

(4)  …

(5)  …

(6)  …

(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.”

12. Prior to completion of the purchase, Ms Musulin arranged, with the consent of Mr Freestone, for an independent mechanical inspection of the vehicle by the Motor Traders’ Association. That inspection revealed that a new engine had been installed in the vehicle. The report of the inspection otherwise showed that the vehicle was in “a good overall condition showing typical wear and tear for age and mileage” and that:

“This vehicle drives and performs well through rev and gear ranges no major mechanical faults were detected during test drive.”

13. Ms Musulin took possession of the vehicle. Shortly thereafter she moved to live in Melbourne. When transferring the registration of the vehicle, she was informed that it was “repaired write off”. The consequence of this, she was informed, was that before transfer of registration could be effected, it would be necessary for the vehicle to be inspected.

14. At the beginning of March 2012, Ms Musulin noticed that the vehicle had an oil leak. She took it to a service centre and was told that it appeared that an oil leak had been repaired by filling gaps with silicone. From the middle of May 2012, Ms Musulin experienced further significant problems with the vehicle. The problem was intermittent ignition failure. Despite a number of attempts, Ms Musulin was not able to have the car brought to a satisfactory standard of performance, nor have the ignition problems diagnosed.

15. On 31 July 2012 Ms Musulin searched the Personal Property Securities Register (“the PPSR”). (The PPSR is a national register of personal property interests, established by the Personal Property Securities Act 2009 (Cth), which was proclaimed to commence on 30 January 2012, that is, after Ms Musulin’s purchase.) The PPSR contained the following entry:

“Written off: Storm, Flood, Other Written-Off, QLD, 01 Oct 2011, Inspected

Storm, Flood, Other Written-Off, VIC, 19 May 2011, Economic Repairable Write-off no data.”

A further search of the Victorian “Written-Off Vehicles Register” identified the cause of the May write off as “malicious damage” to the engine, assessed as “major mechanical damage”.

16. Ms Musulin continued to experience difficulties with the vehicle. On 1 October 2012 she lodged an application in the Tribunal. She named Mr Freestone as the respondent. She identified the orders sought as:

“An order to fix or replace motor vehicle or parts to the approximate value of $34,016[,] $32,950 for car and $1,066 for repairs. I wish Mr Freestone to purchase the car back from me, as I would not have purchased the vehicle if I knew it was a write off …”

17. She gave a lengthy explanation of her reasons for seeking the orders, which included:

“I purchased a car from Mr Freestone in December last year and he neglected to disclose to me that the car had been a write off … Fair Trading said that because the REVS check said that the car was not a write off in the State of NSW’s, Mr Freestone would not have known the cars history. However, MR Freestone told me the car was purchased at the Auctions …”

18. On 22 February 2013 a Statement of Claim was filed in the Tribunal on Ms Musulin’s behalf. It named Freestone as the respondent. It claimed orders in the following terms:

“a. Refund of the purchase price by the Respondent to the Applicant, limited by the jurisdiction of the tribunal in the amount of $30,000,

b.  The Respondent to have title in the Vehicle and collect the vehicle at its own expense;

c.  The Respondent pay the Applicant’s costs.”

It identified two bases for the claim: (i) asserted breach of the statutory guarantee provided by s 54 of the ACL; (ii) asserted misleading or deceptive conduct, contrary to s 18 of the ACL. Specifically, it alleged:

(i) that, by silence, Freestone (through Mr Freestone acting as Freestone’s agent) impliedly represented that the vehicle was fit for the purpose for which it was supplied, of acceptable quality, free from defects, durable, and had never been in an accident, and that those representations were misleading or deceptive and in breach of s 18 of the ACL;

(ii) that, pursuant to s 54 of the ACL, Freestone owed Ms Musulin a statutory guarantee that the vehicle was fit for the purpose for which it was supplied, of acceptable quality, free from defects and durable;

(iii)  that the vehicle was not fit for the purpose for which it was supplied, of acceptable quality, free from defects or durable;

(iv)  that Freestone had failed to comply with the statutory guarantee;

(v)  that she would not have purchased the vehicle if she had known that it had been a write off, or if she had known of the problems she subsequently experienced; and

(vi)  that the vehicle was unfit for the purpose for which it was supplied.

19. The Statement of Claim pleaded that Freestone’s failure to comply with the statutory guarantee was “a major failure” as defined by s 260 of the ACL, and that , pursuant to s 259(3) of the ACL, she was entitled to reject the vehicle.

20. In support of her claim, Ms Musulin filed an evidentiary statement, also dated 22 February 2013, together with a statement of her partner, Daniel Conway, and an expert report on the vehicle prepared by Mr James Rogers.

21. On 27 March 2013 Mr Freestone filed a Reply to the Statement of Claim. This was treated as an evidentiary statement. He denied misleading or deceptive conduct, denied that the vehicle was not of acceptable quality and made the following positive assertions:

(i)  that, at the time of sale, the vehicle was not listed on REVS (the NSW Register of Encumbered Vehicles, established under the Registration of Interests in Goods Act 1986 (NSW) (now repealed));

(ii)  that Ms Musulin had had the vehicle inspected prior to purchase;

(iii)  that Ms Musulin and the mechanic who had inspected the vehicle had been informed that Freestone had purchased the vehicle from an insurance auction, and that a new engine had been installed in the vehicle;

(iv)  that Freestone had no way of knowing that the vehicle would behave as Ms Musulin alleged; and

(v)  that Freestone had provided Ms Musulin with an extended warranty on the vehicle through the National Warranty Company.

22. On 8 April 2013 Ms Musulin sought to file an amended Statement of Claim in the Tribunal. The amendment she sought was to add Mr Shaun Freestone in his personal capacity as second respondent.

23. On 10 April 2013 Ms Musulin’s claim came on for hearing in the Tribunal. Both parties were legally represented. The presiding Member declined to permit the proposed amendment to the Statement of Claim.

24. No official transcript of the proceedings is available. Audio discs of the proceedings were supplied to solicitors for Ms Musulin. The solicitors arranged for two law students to listen to the recordings and transcribe them. Both transcriptions were provided to this Court, although the affidavits to which they were annexed were never formally read. The transcripts were treated in the hearing as accurately representing what took place.

The evidence before the Tribunal

25. In her statement, Ms Musulin gave an account of the dealings she had with Mr Freestone leading up to the purchase of the vehicle. She said that, after a test drive, she asked Mr Freestone if the vehicle had ever been in an accident. He replied that it had not. With his agreement she arranged for the mechanical inspection to which reference has already been made. She asked Mr Freestone about the new engine that the inspection revealed had been installed. He replied:

“There was a warranty job done and the motor that is in the car now is a newer motor, it won’t have any issues.”

Ms Musulin asked what kind of warranty he was offering “through National”. [This was a reference to a part of the negotiations subsequently explained in an affidavit filed in this Court sworn by Daniela Freestone. Ms Freestone said that, when Ms Musulin asked to have an inspection report prepared, Mr Freestone said that, if she proceeded with the purchase, Freestone would “throw in a NWC warranty with the purchase price”. An “NWC warranty” is a warranty extending the manufacturer’s warranty and is administered by the National Warranty Company Pty Ltd. This was referred to in Freestone’s Reply to the Statement of Claim.]

26. Mr Freestone told Ms Musulin that the NWC warranty was “valid for the new, current engine”. Ms Musulin then completed the purchase. On completion of the purchase she was given a “Notice of Sale” which included the following statement:

“THE VEHICLE IS NOT LISTED ON REVS AS BEING, OR HAVING BEEN, A WRITTEN OFF OR WRECKED MOTOR VEHICLE.”

Also annexed to Ms Musulin’s statement was a one page “Contract for the Sale of a Used Motor Vehicle”.

27. The Supplementary Folder filed in this Court contains an index that asserts that, in the Tribunal hearing, Freestone’s legal representative produced a three page document, that included what was referred to as a “Form 4”, which was entitled “Warranty” and stated:

“Warranty under Motor Dealers Act 1974 applies to this vehicle.”

The warranty was specified as being for “3 months or 5,000 kilometres (whichever comes first)”.

28. The third page of that documentation was entitled:

“Customer Contract/Declaration.”

It stated that it was a warranty administered by the National Warranty Company Pty Ltd, and stated the term of the warranty applicable to Ms Musulin’s vehicle as “24 months/60,000kms”.

29. On the transcript of the proceedings in the Tribunal it is impossible to say with confidence that each of those documents was before the Tribunal. The assertion in the index that they were was not the subject of challenge or dispute. It may therefore be accepted that they were. In any event, no further reference was made to them.

30. Ms Musulin then said that after her move to Melbourne, when she had been informed that the vehicle was “a repaired write off”, she telephoned Mr Freestone. The following conversation took place in about March 2012:

“Ms Musulin:  Where [sic] you aware that the car was a write off? And why wasn’t it disclosed to me?

Mr Freestone:  Plenty of cars are repairable write offs, there is now [sic] issue with how it runs, I bought it at Auction and I have no knowledge of its background.

Ms Musulin:  Will it affect the value of the car?

Mr Freestone:  No.

Ms Musulin:  What happens if I need to sell it down the track?

Mr Freestone:  I’ll help you out if you ever want to get rid of it.”

She said that in about March 2012, she noticed that the vehicle was leaking oil. She had some trouble starting the engine, but the vehicle ran adequately, with occasional incidents of not starting, until 17 May 2012, when it failed to start. She had a number of investigations undertaken but none was able to rectify the problem. [An invoice of one of these, dated 4 December 2012, showed that, within a year of its purchase, the vehicle had travelled just over 22,000 kilometres.]

31. Mr Rogers’ report is dated 21 February 2013. He said that he inspected the vehicle on 4 December 2012, when it had, on several occasions, failed to start. He said that it was clear that the engine had been replaced and that visual inspection also showed evidence of corrosion around the engine computer and some water corrosion on some inner panels under the bonnet. He could not locate signs of water damage on the inside of the vehicle but recommended a more intense inspection at a cost of between $2000 and $3000.

32. Freestone relied upon what was contained in Mr Freestone’s Statement in Reply to the Statement of Claim. Mr Freestone gave oral evidence. He was cross-examined about some of Ms Musulin’s assertions. He said that he had bought the vehicle in Victoria, and added:

“It was disclosed to the applicant that I replaced the engine that I bought from the insurance company. So I didn’t hide any information.”

He also said:

“Well of course it’s been written off. It’s an insurance auction … The engine was … had malicious damage to the engine.”

He repeated that he had told Ms Musulin that he had purchased the car from an insurance sale and had replaced the engine.

33. He disputed that the car had been written off twice. He said that the explanation for the two entries in the PPSR was that one entry was made when the vehicle was written off and paid out by the insurance company, and the other when the vehicle was inspected (presumably, after repair and the installation of the new engine). He pointed out that the Vic Roads Written Off Vehicles Register Report said that the vehicle had “malicious damage” to the engine (see [15] above).

33. He said that, as stated on the Notice of Sale, the car had not been listed on REVS.

34. Without having specific recollection, Mr Freestone accepted that he may have had the conversation attested to by Ms Musulin, when (she said) he responded in the negative to her question as to whether the vehicle had been in an accident. He could not recall a conversation about the NCW warranty.

35. In written submissions filed on behalf of Ms Musulin in the Tribunal, it was again stated clearly that the case was put on the two bases previously asserted, that is, in reliance on s 18 and s 54 of the ACL. The “misleading or deceptive conduct” asserted under s 18 was said to be Mr Freestone’s silence concerning the vehicle’s written off status. The argument put in support of the claim under s 54 appears to have been simply that the vehicle was not fit for the purpose for which such goods are commonly supplied, and was not free from defects. No reference was made to any warranty, either the warranty under the Motor Dealers Act, or the extended NWC warranty. There was no contractual claim.

The judgment in the Tribunal

37. On 29 July 2013, the Tribunal delivered judgment, dismissing Ms Musulin’s application. The Tribunal expressly rejected Ms Musulin’s claims under s 54, and rejected the claim that Mr Freestone had engaged misleading or deceptive conduct. The judgment is short, but contains the following relevant paragraphs:

“4  The respondent states that he purchased the vehicle in Victoria at an insurance auction. The vehicle had fire damage in the engine bay, which was the basis for the repairable write off, and he replaced the engine and sold the vehicle.

…

15 The Tribunal finds that the respondent has not breached the warranties that apply under the Motor Dealers Act or the guarantees provided by the Australian Consumer Law, Section 54.

16  The price is in accordance with market expectations. The applicant had the opportunity to have the vehicle independently inspected prior to purchase and this was a comprehensive inspection which included a road test, interior inspection, electrical system, engine and exhaust, body and under structure, cooling system, braking system, steering and suspension, fuel system and transmission.

17  The Tribunal finds that the disclosures made by the respondent together with the independent assessment of the vehicle do not give rise to a claim of misleading or deceptive conduct by the respondent.

18  The applicant had the vehicle comprehensively inspected upon purchase and the subsequent mechanical investigation does not establish that the issues with the vehicle can be related to the fact it was considered to be a repairable write off, which on the evidence, had been properly repaired at the time of sale.

19 The evidence provided does not identify or establish a defect for which the respondent should reasonably been aware of, or that arose under an obligation under statutory warranties provided by the Motor Dealers Act or the Australian Consumer Law.”

[The references to a statutory warranty provided by the Motor Dealers Act may be a reference to Sch 2 to the Motor Dealers Act 1974 (now repealed), which imposed an obligation on a motor dealer to repair defects occurring within a nominated time, or a nominated range of the kilometres travelling. As it applied to Ms Musulin’s vehicle the obligation was to repair defects occurring within 3 months of purchase, or 5000 kilometres.

The reference in paragraph 4 to fire damage appears to be a mistake. So far as the evidence was capable of establishing the reason for the engine replacement it appears to have been water damage (although the earlier reference, in the Victorian Written Off Vehicles Register to “malicious damage” is somewhat mysterious).]

The District Court proceedings

38. Section 67 of the CTTT Act relevantly provided:

“67  Appeal against decision of Tribunal with respect to matter of law

(1)  If, in respect of any proceedings, the Tribunal decides a question with respect to a matter of law, a party in the proceedings who is dissatisfied with the decision may, subject to this section, appeal to the District Court against the decision.

(2)  …

(3)  After deciding the question the subject of such an appeal, the District Court may, unless it affirms the decision of the Tribunal on the question:

(a)  make such order in relation to the proceedings in which the question arose as, in its opinion, should have been made by the Tribunal, or

(b)  remit its decision on the question to the Tribunal and order a rehearing of the proceedings by the Tribunal.

…”

39. By Amended Summons filed in the District Court on or about 5 December 2013, Ms Musulin appealed to that court against the orders of the Tribunal. The grounds of the appeal were stated as follows:

“2  The decision of the Tribunal was against the weight of evidence in finding the vehicle the subject of the CTTT proceedings was, at the time of sale on or about 9 December 2011 of an acceptable quality within the meaning of s 54 of Schedule 2 of the Competition and Consumer Act 2010 (‘Australian Consumer Law’):

a  The tribunal gave the report of the Motor Trader’s Association of NSW Inspection Centre dated 6 December 2011 too much weight,

b  The tribunal gave to [sic] much weight to evidence the vehicle had, as at 17 May 2012 travelled approximately 22,000 kms since its date of purchase,

c  The tribunal did not give enough weight to:

i  the plaintiff’s evidence,

ii  the expert evidence of the Volkswagen mechanic James Rogers,

iii  the various searches of the vehicle in particular PPSR search dated 31 July 2012 showing the vehicle was written off ‘storm, flood or other’,

3. As a consequence of the matters referred to in paragraph 2 above the tribunal erred in finding the plaintiff was not entitled to a statutory guarantee pursuant to s 54 of the Australian Consumer Law.

4. The tribunal erred in not finding the defendant had engaged in misleading and deceptive conduct pursuant to s 18 of the Australian Consumer Law when it represented to the plaintiff on or about 3 December 2011 through its director, Shaun Freestone that the vehicle had never been in an accident. The vehicle had been written off for:

a.  damage to the engine

b.  flood damage.

5. The tribunal erred in not finding the defendant had engaged in misleading and deceptive conduct (by way of silence) pursuant to s 18 of the Australian Consumer Law when it failed to disclose to the plaintiff at the time of sale that the vehicle had been written off.

6.  The tribunal erred in taking into account that the defendant was not aware of any defects in relation to the intermittent starting issue.

7.  The tribunal gave inadequate reasons for its decision that the defendant had not engaged in misleading and deceptive conduct as the tribunal did not disclose the reasoning process used to make this finding.

8. The tribunal gave inadequate reasons for its decision that the plaintiff was not entitled to her statutory guarantee pursuant to s 54 of the Australian Consumer Law:

a.  the tribunal did not refer to the plaintiff’s evidence or the evidence of the expert, James Rogers.

b.  the tribunal did not disclose the reasoning process as to why the report of the Motor Trader’s Association should be accorded greater weight than the lay evidence adduced by the plaintiff, the searches and the expert James Rogers.”

40. In this Court, it was accepted that Grounds 2, 3, 7 and 8 in the Amended Summons do not come within s 67(1) of the CTTT Act. It was, however, contended that Grounds 4, 5 and 6 raised issues “with respect to a matter of law” and are available under s 67(1).

41. When the appeal came on for hearing in the District Court, things took an unexpected turn. The judge drew attention to a document which he appeared to have in his papers, but of which both legal representatives claimed to be ignorant, and which had not been the subject of any reference in the Tribunal. This, it seems, was the NWC warranty, extending the contractual warranty or the Motor Dealers Act warranty of 3 months or 5000 kilometres to 24 months or 60,000 kilometres - one of the documents produced at the Tribunal hearing by Freestone’s legal representative.

42. Initially, in the District Court, counsel for Ms Musulin expressly disclaimed reliance upon the NWC warranty, and said that he did not have and had never had a copy of it in his brief. The judge then asked counsel whether he relied upon the NWC warranty, to which counsel replied “I do rely on it now”. This about face by counsel for Ms Musulin may be relevant to the ultimate disposition of the proceedings in this Court.

43. The judge then proceeded to deal with the appeal on the basis of that document.

The proceedings in this Court

44. It was common ground that the District Court thus decided the appeal on a basis that was not raised in the Amended Summons, and had not been raised in the Tribunal. It was for that reason that Ms Musulin realistically conceded that the orders could not stand.

45. It will recalled that, initially, Freestone sought, not only that the orders of the District Court be quashed, but also remittal of the matter to either the District Court or to NCAT (the successor of the Tribunal). In its written submissions, however, it abandoned the notion of remittal to either the District Court or the Tribunal, and pressed for orders that the District Court orders be quashed or set aside and, in lieu thereof, that the Court order that Ms Musulin’s appeal to the District Court be dismissed. It also sought an order for reimbursement of the money paid pursuant to the orders, and for Freestone’s costs in the District Court and this Court.

46. In written submissions filed on behalf of Ms Musulin it was accepted that the District Court orders must be quashed, but on her behalf orders were sought remitting the matter either to the District Court or to NCAT, with orders that each party bear her or its own costs (and that Ms Musulin be granted a certificate under s 6(1) of the Suitors’ Fund Act 1951 (NSW) in respect of her costs).

47. On the hearing, however, it was conceded (appropriately, in my opinion) that remittal to NCAT was inappropriate. Remittal to the District Court, however, was pressed, on the basis that Ms Musulin’s appeal to that jurisdiction had never been properly determined.

Remittal to the District Court

48. Senior counsel for Ms Musulin submitted (correctly, in my opinion) that Ms Musulin’s legitimate appeal in the District Court has never been properly determined. That is, subject to what follows, a sound basis for remittal. However, relief under s 69 of the Supreme Court Act is discretionary. In this case, having regard to the relatively small amount in issue, the tortured path the proceedings have to date taken, and the disproportionate costs that have been incurred, an order remitting the proceedings for yet further hearing ought not be made unless, on an assessment of Ms Musulin’s prospects of success in the District Court, that course is justified. It would not be an appropriate exercise of discretion to remit the matter to the District Court if there is no realistic prospect of her succeeding on that appeal.

49. Senior counsel for Ms Musulin contended that there remain three undetermined grounds of appeal to the District Court, any of which, if successful, would entitle Ms Musulin to success in the District Court appeal. Counsel for Freestone contends that none of the three grounds has any realistic prospects of success and that remittal would therefore be a (costly) futility.

50. The three potential grounds of appeal (reformulated, but essentially drawn from the Amended Summons in the District Court) identified by senior counsel for Ms Musulin are:

(i)  whether Freestone engaged in misleading or deceptive conduct by representing, through Mr Freestone, to Ms Musulin that the vehicle had never been in an accident;

(ii)  whether Freestone engaged in misleading or deceptive conduct by Mr Freestone’s failure to disclose that the vehicle had been written off prior to the sale to Ms Musulin;

(iii)  whether the Tribunal had incorrectly decided the statutory guarantee issue by taking into account that Freestone was not aware of the vehicle’s intermittent starting issue.

51. I will deal with each in turn.

Ground (i)

52. Counsel for Freestone argued that this ground cannot succeed because the Tribunal did not (expressly) make any finding that Mr Freestone told Ms Musulin that the vehicle had not been in an accident. That submission, in my opinion, is untenable. It is true that the Tribunal’s very short reasons for judgment do not expressly contain a factual finding to that effect. However, that Mr Freestone did make that statement to Ms Musulin is clearly stated in Ms Musulin’s written evidence, and, in his oral evidence, Mr Freestone agreed that he “possibly could have said that”. There is nothing in the reasons for judgment to suggest that Ms Musulin’s evidence was not accepted, and there is no apparent reason why it should not have been.

53. In my opinion, it should be inferred that the Tribunal accepted that Mr Freestone did tell Ms Musulin that the vehicle had never been in an accident.

54. Counsel for Freestone went on to submit that any such finding would be inconsistent and very difficult to reconcile with the express findings that Mr Freestone disclosed to Ms Musulin that he had purchased the vehicle at an insurance auction, and had replaced the engine.

55. I disagree. There may be many reasons why a vehicle is sold at an insurance auction and had its engine replaced, other than having been damaged in an accident. One problem is the lack of specificity of the word “accident”. In ordinary usage, in respect of motor vehicles, the word is taken to mean a collision of some sort. That is the real reason that Ms Musulin’s reformulated Ground 1 cannot succeed - there was no evidence that the vehicle had been in an accident. There was some evidence that the vehicle had suffered water damage, but no cause of the damage was assigned. The representation by Mr Freestone has not been shown to have been incorrect, let alone misleading and deceptive. Certainly, it cannot rise to the level of establishing misleading or deceptive conduct.

56. An argument was also directed to causation. The argument was that Ms Musulin did not state in evidence that, had she been told that the vehicle had been in an accident, she would not have purchased it. That, again, is true. However, the very fact that Ms Musulin asked the question is capable of giving rise to some inference that, had she been advised that the vehicle had been in accident, she would, at the very least, have considered her position. Moreover, she made such an assertion explicitly in her application to the Tribunal. Proceedings in the Tribunal were conducted with a minimum of formality, and the Tribunal were not bound by rules of evidence: the CTTT Act, s 28(2). In my opinion, there was sufficient evidence of causation. However, given the view expressed above, it is not necessary finally to resolve this question.

57. I would reject Ms Musulin’s first proposed ground as not having adequate prospects of success to justify remittal to the District Court.

Ground (ii)

58. The second proposed ground is that Freestone (through Mr Freestone) engaged in misleading or deceptive conduct by failing to disclose that the vehicle had previously been written off.

59. Counsel for Freestone first took issue with this ground as not raising a question with respect to a matter of law. In my opinion, the ground is sufficiently broad to raise an issue with respect to a matter of law. The matter of law is the capacity of a failure to disclose a potentially relevant circumstance to amount to misleading or deceptive conduct. That Mr Freestone had purchased the vehicle at an insurance auction is sufficient to warrant the inference that he knew enough of the history of the vehicle to render it appropriate that he disclose that history. The Tribunal accepted that Mr Freestone had told Ms Musulin that he had purchased the vehicle at an insurance auction. This is not an explicit disclosure that the vehicle had previously been written off, although, to the initiated, it may signify or convey such information. It would not necessarily signify or convey that fact to the uninitiated. However, I am not persuaded that there was any obligation on Freestone to disclose that the vehicle had been written off. That is particularly so in the light of Ms Musulin’s having had an independent inspection of the vehicle.

60. There is no evidence of any act of misleading or deceptive conduct on the part of the Freestone nor of any omission that amounts to misleading or deceptive conduct.

Ground (iii): statutory guarantee (s 54 ACL)

61. The proposed third ground is that the Tribunal incorrectly took into account that Freestone was not aware of the vehicle’s intermittent ignition issues. This is the ground numbered 6 in the Amended Summons filed in the District Court.

62. Counsel for Freestone responded to this ground by contending that it could not succeed because the evidence called on behalf of Ms Musulin failed to establish that the vehicle had any defect at the time of its purchase, and, again, that the ground does not raise an issue “with respect to a matter of law” within s 67(1) of the CTTT Act.

63. The latter, in my opinion, is hardly an answer to a ground which asserts error in taking into account an irrelevant consideration. Such a ground clearly raises an issue “with respect to a matter of law”. That aspect of Freestone’s response must be rejected. Moreover, the submission that the evidence failed to disclose a defect in the vehicle at the time of purchase somewhat overstates the position. The evidence was that the vehicle had suffered some engine damage, resulting in replacement of the engine. Notwithstanding a satisfactory mechanical report, within a few months of purchase, the vehicle developed problems, the cause of which could not be diagnosed. An inference is arguably available that the ignition problems were present, although latent, at the time of sale. However, on the state of the evidence in the Tribunal, it would be difficult, if not impossible, to sustain a finding of fact to that effect. There was nothing in s 67 to suggest that Ms Musulin would be permitted to expand the evidentiary basis of her case in the event of remittal.

64. In any event, it seems to me that the ground is based on a false premise. There is no explicit finding in the Tribunal judgment that Freestone was not aware of any defects in relation to the intermittent starting issue. The nearest that the judgment comes to such a finding is in [19] where the Tribunal said:

“19. The evidence provided does not identify or establish a defect for which the respondent should reasonably have been aware of, or that arose under an obligation under statutory warranties provided by the Motor Dealers Act or the Australian Consumer Law.”

That is not an indication that the Tribunal took into account that Freestone was not aware of the intermittent starting issues.

65. Accordingly, this ground also could not succeed in the District Court.

Conclusion

66. The consequence of these conclusions is that remittal to the District Court would achieve nothing. The appeal to that court would necessarily be dismissed. In those circumstances, the appropriate course for this Court is to order that the Amended Summons to the District Court be dismissed. Although s 69 does not expressly provide for such an order, there is precedent in this Court for taking such a course: see Allwood v Peter Vivian Benjafield t/as Benjafield & Associates Lawyers [2014] NSWCA 355; and see Wende v Horwath (NSW) Pty Ltd [2014] NSWCA 170; 86 NSWLR 674, at [95]-[101].

Costs

67. Freestone seeks an order for costs in respect of both the District Court proceedings and the proceedings in this Court. In my opinion, such an order is irresistible. It was Ms Musulin who was the moving party in the District Court and, although she had some success in that court, it has now been conceded on her behalf that that success was on an erroneous basis. The conclusions I have reached above demonstrate that she ought to have failed in the District Court.

67. It is, up to a point, true, as was contended on her behalf, that the District Court proceedings “were affected by miscarriages in the legal process”. However, Ms Musulin must bear some of the responsibility for the miscarriages. Rather than correcting the District Court judge, who clearly signalled that he was about to act upon an erroneous basis, counsel for Ms Musulin adopted the erroneous basis on which the judge proposed to, and subsequently did, act. Ms Musulin must pay the costs of Freestone in the District Court.

68. The concession as to the fate of the application to this Court was made at a relatively late stage, and, in any event, it was sought, on her behalf, to salvage something of the proceedings. Ms Musulin has been unsuccessful in this Court. To the extent that some time was saved by her “capitulation”, to adopt the word used by counsel for Freestone, that occurred at a point after costs had been incurred.

69. In my opinion, Ms Musulin must pay the costs of Freestone incurred in the proceedings in this Court also.

70. The orders I propose are:

1. The order of the District Court on 18 December 2013 is quashed;

2. The first respondent’s appeal from the Consumer, Trader and Tenancy Tribunal to the District Court is dismissed;

3. The first respondent is to pay the applicant’s costs of and incidental to the proceedings in the District Court;

4. The first respondent is to reimburse the applicant in the sum of $5132 paid in compliance with the orders of the District Court of 18 December 2013;

5. The first respondent is to pay the applicant’s costs of and incidental to the proceedings in this Court and have a certificate under the Suitors’ Fund Act 1951 (NSW), if otherwise qualified.

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Decision last updated: 11 June 2015