Hargrave Motor Repairs Pty Ltd v Commissioner of Fair Trading, New South Wales Office of Fair Trading

[2008] NSWADT 173

CITATION:	Hargrave Motor Repairs Pty Ltd v Commissioner of Fair Trading, New South Wales Office of Fair Trading [2008] NSWADT 173
DIVISION:	General Division
PARTIES:	APPLICANT Hargrave Motor Repairs Pty Ltd RESPONDENT Commissioner of Fair Trading, New South Wales Office of Fair Trading
FILE NUMBER:	083074
HEARING DATES:	13 May 2008
SUBMISSIONS CLOSED:	13 May 2008
DATE OF DECISION:	13 June 2008
BEFORE:	Molony P - Judicial Member
CATCHWORDS:	Motor Vehicle Repair Act - disciplinary action
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Administrative Decision Tribunal Act 1997 Home Building Act 1989 Motor Vehicle Repairs Act 1980
CASES CITED:	Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409 Moore v Lambeth County Court Registrar [1969] 1 All ER 782 at 783 -784 ; [1969] 1 WLR 141 at 142 Browne v Dunn (1893) 6 R 67 Allied Pastoral Holdings Pty Ltd v FCT [1983] 1 NSWLR 1 Jones v Dunkel (1959) 101 CLR 298; [1959] ALR 367 Briginshaw v Briginshaw (1938) 60 CLR 336 Calcaro v Chief Commissioner of State Revenue [2004] NSWADT 158 Ng & Anor v Commissioner for Fair Trading, NSW Office of Fair Trading [2007] NSWADT 259 Director-General, Department of Fair Trading v. Cohen [2000] NSWFTT 3 Younan v Commissioner of Fair Trading [2007] NSWADT 170 Harb v Commissioner of Fair Trading [2007] NSWADT 175
REPRESENTATION:	APPLICANT J Capsanis, solicitor RESPONDENT J Coss, solicitor
ORDERS:	The decision of the Commissioner to take disciplinary action against Hargrave Motor Repairs Pty Ltd and require it to pay a total of $10,000.00 to the Contingency Fund is affirmed.

REASONS FOR DECISION

1 This matter involves an application by Hargrave Motor Repairs Pty Ltd (‘Hargrave’) to review a decision by the Commissioner of Fair Trading to take disciplinary action against it. The Commissioner required Hargrave to make two payments of $5,000 each to the contingency fund established under the Motor Vehicle Repairs Act 1980. The first, on the ground that Hargrave had “carried on the business of a repairer in such a manner that the repair work done in connection with that business has been below usual trade standards,” and, the second, on the ground that it had carried on business “in a dishonest or unfair manner.”

Background

2 Hargrave is a long established motor vehicle repair business doing crash repair work in Darlinghurst. It is has been owned and managed by its present owners, Nicholas Savva and his wife, since 1979. Hargrave holds a repairers licence under the Motor Vehicle Repairs Act 1980 in the classes Motor Mechanic (Fixed Workshop) including airconditioning, Vehicle Painted (Fixed Workshop) and Panelbeater. It has 14 employees, including a manager. Until the Commissioner took the present disciplinary action against Hargrave, there had been no disciplinary action taken against it during its many years as a licence holder.

3 In August 2007 Hargrave repaired an Alfa Romeo 147, which had sustained rear end damage, under a contract with the vehicle’s insurer, NRMA. On 16 August 2007 Hargrave provided an estimate for the repairs to NRMA. Among the parts to be supplied were the rear bumper bar cover and rear beaver panel. The estimate also identified damage to the boot floor area and allowed six hours for the repair. The insurer gave the go ahead for the repairs, which were then undertaken by Hargrave. The repairs were completed and the vehicle collected by its owner. Hargrave invoiced NRMA for the repairs on 27 August 2007. That invoice included charges for the cost of a replacement rear bumper bar cover and rear beaver panel.

4 On 18 September 2007 the owner took the vehicle to NRMA questioning the alignment of the rear bumper bar cover and some paint issues. NRMA inspected the repairs and then made a complaint to the Motor Vehicle Repairs Authority (‘the Authority’). On 19 September 2007, John Kenny, an Inspector from the Authority, inspected the vehicle at NRMA premises, in the presence of a NRMA Senior Assessor.

5 In his report Inspector Kenny reported the following observations:

“(a) The rear Bumper Bar Cover was not of new appearance and on the underside there was evidence of repairs centre to left side. Note: On the Estimate … the Rear Bumper Bar Cover is listed and charged for replacement. A new Bumper Bar Cover was not fitted and this is a ground for action under Section 42(1)(h) of the Act.

(b) The rear Beaver Panel had not been removed from the vehicle as detailed on the initial Estimate … and was not replaced as identified on the Tax Invoice …

(c) On the rear Beaver Panel there has been an attempted repair to the left side area that I consider is totally unacceptable and can only described as extremely un-tradesperson like. There are areas on the left area of this panel that have been distorted by the impact that are unrepaired and the attempted areas of repair display incomplete body filler application (heavy lines and what appears to be a porous filler section), file and orbital sander markings in the body filler that has been applied plus paint sink back in the areas of body filler being applied. … It must be noted that this area can only be visually sighted with the interior Boot trims and rear Bumper Bar Cover removed.

(d) On the Estimate … repair of the Boot Floor was written in by the assessor at time of his assessment and six (6) hours was allowed for the repair. At the time of my inspection there was little evidence of repair to this area as the floor and wheel well areas were deformed, … A seam sealer type product had been applied to cover the open seam at Beaver Panel to Boot Floor inner and outer areas. … This open seam is a result of accident impact.

(e) The paint work on the tail gate has numerous inclusions in the paint surface and rectification will require complete re-spray of this item and blending of adjoining panels, …”

6 Inspector Kenny noted that the vehicle had been returned to Hargrave, which had since completed the contracted repairs to a satisfactory standard, at no additional cost. The owner had been supplied with a replacement vehicle while those repairs were undertaken. Inspector Kenny recommended that the disciplinary action be taken against Hargrave under the Motor Vehicle Repairs Act 1980.

7 That recommendation was accepted. On 7 November 2007 a show cause notice was issued to Hargrave calling on it make show why disciplinary action should not be taken.

8 On 29 November 2007 the Nicolas Savva and his wife, as directors of the company, responded in writing. They wrote:

“As we have been operating this company, Hargarve Motors Repairs Pty Ltd for over 30 years, we pride ourselves on customer satisfaction, quality repairs and workmanship. We are regarded by many of our clients and colleagues as one of Sydney's foremost motor vehicle body repairers and at no time do we want our good company name bought into disrepute.

This is why we are so shocked by this matter, which has been bought, to our attention. We have been informed by our manager … and as mentioned to the NRMA assessor at the time of re-inspection, this was an innocent mistake and a variation on the repair method should have been sent through. We are totally aware that this kind of practice is not acceptable in any industry nor do we conduct our business in this manner. As [the manager] has explained to us this incident was by no way deliberate.

It is plain to see that there has been a break down in communication within our management office and human error is to blame for this oversight. As instructed by NRMA any alterations, additional or adjustments made to a quote must be sent through to their office and authorized prior to completing the repairs to the vehicle. Our staff is totally aware of this protocol. The method of repair had been changed to repair the Alfa Romeo in question and the variation was not sent through to the NRMA.

While we do not excuse our staff for such an error, all we can say in their defense is that August 2007 was an extremely busy month for our business. With over 75 cars repaired within that month it is very possible that paper work and files have been misplaced or lost. To ensure we have no future occurrence of such an oversight a 4 point quality check system has been put into place.

This consists of:

1. Management are to carry out initial assessment of all vehicles when dismantled;

2. Vehicles are to be inspected once repairs are completed prior to paint;

3. Vehicles are to be inspected after being painted and prior to be re-assemble;

4. Full inspection of vehicles once assembled & detailed.

Our staff in the office, panel beaters, spray painters both seniors and apprentices have been given fair warning that this incident is not to be repeated nor will it be tolerated.

Our business has always put the consumer and their safety first and we would never carry out dodgy, cheap and unsafe repairs to endanger a client and ruin our company's untarnished reputation.

Both Theresa and myself as directors of Hargrave Motor Repairs Pty Ltd have taken further precaution to over look all in coming and out going paper work through the office. We will endeavor to spend more time with our staff to oversee all quoting and invoicing carried out to prevent this type of error happening again. Though unfortunate, this incident was rectified promptly, correctly without causing any inconvenience to the client.”

9 Despite these assurances, the Commissioner took the view that “the more plausible view of events” was that Hargrave had been aware that the rear bumper bar cover and rear beaver panel had not been replaced. The Commissioner found that by invoicing for those replacement parts Hargrave had carried on business “in a dishonest or unfair manner,” a ground for disciplinary action under section 42(1)(h). The Commissioner also noted that Hargrave had not addressed the allegations of the repair work being below usual trade standard and accepted Inspector Kenny’s report as to the standard of the work. This is a ground for disciplinary action under section 42(1)(a). A decision was under section 44(1)(b) and (2)(a) to require Hargrave to contribute $5,000 to the Contingency Fund in respect of each ground. Hargrave was advised of this decision by a letter dated 22 January 2008.

10 On 4 March 2008 Nicholas Savva filed an application to review that decision with this Tribunal. That application was made in his name but has subsequently been amended, by consent, to show the Respondent as Hargrave Motor Repairs Pty Ltd. I heard the application on 13 May 2008.

11 Section 63 of the Administrative Decision Tribunal Act 1997 says that in determining an application for review the Tribunal is to make the correct and preferable decision having regard to the material before it, and any applicable written or unwritten law. It is well established that in considering an application for review the Tribunal is not constrained to have regard only to the material that was before the Commissioner, but may have regard to any relevant material before it at the time of the review: Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409.

Issues

12 The application was originally listed for a short hearing on the basis that it was an appeal against penalty only. It soon became apparent that that while there was agreement with respect to some of the underlying facts, that Hargrave did not accept that all the work reported on by Inspector Kenny was below usual trade standard. It did not accept that it had carried on business in a dishonest manner.

13 As a result I heard detailed evidence from both Mr Savva and Inspector Kenny. It should be noted that Inspector Kenny was present, visibly and openly assisting Mr Coss with technical details, when Mr Savva gave evidence. This was later made an issue of complaint by Mr Capsanis, who appeared for Hargrave, although he was unable to suggest what course of action I should take with respect to that complaint. Mr Capsanis had not sought an order for witnesses out.

14 My view is that Inspector Kenny’s presence during the course of Mr Savva’s evidence was not improper and was ultimately of assistance to me in defining and understanding the differences in opinion between Mr Savva’s and Inspector Kenny’s evidence. This is so as there was no conflict between their evidence as to facts and events. Their differences were differences of opinion relating to whether the work was below usual trade standard. Having experts hear each others evidence in such circumstances is not in my view improper or prejudicial. There is no rule of law requiring witnesses to remain outside court until they give their evidence: Moore v Lambeth County Court Registrar [1969] 1 All ER 782 at 783 -784; [1969] 1 WLR 141 at 142 (CA).

15 The issues which require determination are:

- Whether the work done by Hargrave was below usual trade standards;

- Whether Hargrave carried on business in a dishonest or unfair manner; and

- If yes to either of the above, whether any, and what, disciplinary action should be taken against Hargrave.

Was the work below usual trade standards?

16 There were differences in opinion between Mr Savva and Inspector Kenny as to whether all the work reported on by Inspector Kenny was below usual trade standards.

17 Mr Savva is a qualified panel beater who had been working in that trade for more than 30 years. I accept that he is qualified by both training and experience to express an expert opinion regarding the quality of panel beating repair work. Inspector Kenny has been an inspector with the Authority for 20 years. He is a qualified motor vehicle mechanic who has been inspecting and reporting on panel work in the course of his duties for the last 15 years. As an inspector he has undertaken professional courses on panel repair practices conducted by I-CAR, an industry training body. I accept that he too is qualified by training and experience to express an expert opinion regarding the quality of panel beating repair work.

18 Mr Savva in his evidence agreed with Inspector Kenny that the following items repaired by Hargrave were below trade standard:

- the repair around the grommet on the beaver panel (Photo3);

- the repairs to the top of the beaver panel (Photo 4); and

-the application and finishing of sealer to the inside rear left of the beaver panel (Photo 5).

19 I shall consider the other items one at a time.

20 Other Defects in the Beaver Panel – These are shown in Photos 1 and 2. The major impact to the vehicle was to the left hand rear. Inspector Kenny said that the repairs to the left hand side of the beaver panel (which is normally hidden from view by the bumper bar cover) had not been finished off properly, and was not to industry standard. Mr Savva explained that the damage to the beaver panel had been beaten out, then covered in resin and sanded. He commented that this process meant that the manufacturer’s spot welds – which are visible on the right hand side of the beaver panel – are removed. He thought these repairs to industry standard. I accept Mr Savva’s evidence in relation to the spot welds. His evidence did not satisfactorily address the obvious and unsightly evidence of repairs, which can be seen in both photos, to the left hand side of the beaver panel. I accept Inspector Kenny’s evidence that this is below trade standard.

21 Inside rear left of the Beaver Panel and Boot area – This is shown in Photo 5. Aside from the sealer, with which Mr Savva agreed, Inspector Kenny commented that there was deformation of the beaver panel and of the boot floor, through to the boot well, which he described as being work of a “very poor quality.” Mr Savva said this work was acceptable. Part of the deformation can be seen in photo 5. I accept Inspector Kenny’s evidence in this regard.

22 The Paint Work - Inspector Kenny noted that the bumper bar cover had been straightened, filled and resprayed. He said that there was pock marking in the paintwork. This, however, was not put to Mr Savva and is not apparent from the photographs. In those circumstances I am reluctant to draw a conclusion adverse to Hargrave based on Inspector Kenny’s evidence alone: Browne v Dunn (1893) 6 R 67 and Allied Pastoral Holdings Pty Ltd v FCT [1983] 1 NSWLR 1.

23 I conclude that Hargrave did undertake repair work to this car, which was below usual trade standard. That work was in areas which, when the work was completed, were covered by the bumper bar cover and internal boot and beaver panel trims. It was therefore not detectable without removing those items. It should have been detected and rectified by the repairer in the course of ordinary quality control checks. The fact that the directors of Hargrave advised the Commissioner, after these items were detected, that they were implementing a four point quality control process to address these issues, does not imbue me with confidence in the quality control processes in operation when the work was done.

Did Hargrave carry on business in a dishonest or unfair manner?

24 Mr Savva was not involved in giving the original estimate for the repairs of the car, in repairing the car, in the decision he says was made to vary the method of repair, in checking the quality of the work done, or in dispatching the invoice charging for replacement parts (rather than repairs) to NRMA. These decisions, he said, were made by Hargrave’s manager. He said that the manager has made a phone call to NRMA advising of the change in repair method, from replacement to repair of the beaver panel and bumper panel. There had then been a systems failure in that the relevant paper work was not altered to reflect the change. He was asked whether there was a record of the phone conversation, but said there were no records kept of those conversations. Changes of that nature are recorded by altering the paper work for the job, but there the system had failed and it had not been done. Mr Savva said that, ultimately, it was his business and his responsibility.

25 I noted that Mr Savva’s evidence as to the events in question was hearsay in nature and inquired why the manager was not giving evidence. I was told by Mr Capsanis that there was nothing sinister in the manager not being called, but was given no reason for him not giving evidence. Be that as it may, the manager played a central role in the events in question and his evidence would have been of considerable assistance in establishing what did occur. He is an employee of Hargrave. In the ordinary course of events I would have expected him to be called. In the circumstances I am entitled to draw an inference that the manager’s evidence would not have assisted Hargrave’s case: Jones v Dunkel (1959) 101 CLR 298; [1959] ALR 367.

26 There is no doubt that Hargrave contracted to and charged for the supply of a replacement beaver panel and bumper bar panel, but repaired both those parts, rather then replacing them. The Commissioner says this is both dishonest and unfair. Mr Savva insisted that that this was a result of an internal mistake within his company, but had no personal knowledge of the circumstances. In determining matters I am required to reach a standard of reasonable satisfaction on the balance of probabilities that the conduct of Hargrave in the course of its business was dishonest or unfair: Briginshaw v Briginshaw (1938) 60 CLR 336. Mr Savva’s explanation is based entirely on hearsay. Because of this and because the manager could have been called to give direct evidence from his own personal knowledge of those circumstances, and as no reasonable explanation was given for his failure to do so, I am not prepared to give Mr Savva’s evidence about the circumstances any weight.

27 That being the case I am reasonably satisfied by the evidence that Hargrave, in the course of its business, acted both dishonestly and unfairly by invoicing NRMA for parts, which it did not supply. In reaching that conclusion I acknowledge that a finding of dishonesty necessarily involves a finding of intent to deceive or dishonestly obtain payment from NRMA, on the part of Hargrave or its officers. In the absence of a plausible and acceptable explanation of how NRMA was charged for parts which were not used, and in the light of the other evidence concerning the usually concealed repair work that was below standard, I am satisfied that the objective circumstances disclosed by the evidence is sufficient to allow me to conclude that Hargrave acted both dishonestly and unfairly.

Disciplinary Action

28 I am satisfied that the grounds for taking disciplinary action specified in section 42(1)(a) and (h) of the Motor Vehicle Repairs Act 1980 have been made out against Hargrave.

29 As a result it was open to the Commissioner to take any of the disciplinary actions set out in section 44(1) and (2) against Hargrave.

(1) The Authority may, after complying with section 41, take any of the following actions if satisfied that a ground exists on which the holder of a licence or certificate may be dealt with under this Part:
(a) reprimand the holder,

(b) require the holder to comply within a specified time with a requirement specified by the Authority, being a requirement relating to the conduct of the business or other activity to which the licence or certificate relates or to any other thing regulated by or under this Act,

(c) suspend the licence or certificate for a period not exceeding 12 months,

(d) in the case of the holder of a licence, disqualify the holder or any person concerned in the direction, management or conduct of the business to which the licence relates from holding a licence or from being concerned in the direction, management or conduct of a business for the carrying on of which a licence is required, either permanently or for such period as the Authority thinks fit,

(e) impose a condition or restriction on the licence or certificate,

(f) cancel the licence or certificate.

(2) Without limiting the powers conferred by sub-section (1), among the requirements that the Authority may specify under sub-section (1)(b) is a requirement that the holder of the licence concerned:
(a) make a contribution to the Contingency Fund of such amount as the Authority specifies, or

(b) indemnify the Fund to such extent as the Authority specifies in the event of a particular contingency arising concerning the activities of the holder of the licence.

30 The Commissioner chose to require Hargrave to pay $5,000 to the contingency fund with respect to each ground found proven. Hargrave argues that this is excessive given its previously unblemished record and the circumstances of the breaches. Mr Capsanis, for Hargrave, submitted that the penalty imposed was disproportionate to the damage sustained by NRMA, and its customer, and argued that the penalty should be proportionate and relative to the wrong done. In this case the value of beaver panel was $601.75 and that of bumper bar cover $645.76.

31 In contrast the Commissioner submitted that these were serious offences, which required significant censure. The penalties imposed, it was said, reflected and took into account Hargrave’s previously unblemished record. Mr Coss, for the Commissioner, referred to a number of decisions made by me regarding relevant considerations in determining appropriate disciplinary action. These were Calcaro v Chief Commissioner of State Revenue [2004] NSWADT 158 and Ng & Anor v Commissioner for Fair Trading, NSW Office of Fair Trading [2007] NSWADT 259.

32 Those cases are not the only ones in which the Tribunal has sought to clarify the considerations to be taken into account when determining disciplinary action, in an effort to achieve both coherency and consistency in determining those matters. Most, like Ng, have occurred in the context of disciplinary decision under the Home Building Act 1989. They include Director-General, Department of Fair Trading v. Cohen [2000] NSWFTT 3 (a decision of O’Connor DCJ in his then capacity as Chairperson of the Fair Trading Tribunal); Younan v Commissioner of Fair Trading [2007] NSWADT 170 and Harbv Commissioner of Fair Trading [2007] NSWADT 175 (both decisions of Handley JM).

33 These decisions have resulted in the evolution of a series of considerations which are taken into account in determining disciplinary action under the Home Building Act 1989. I agree with Mr Coss, that with some minor adaptation, they are equally relevant to a determination of disciplinary action under section 44 of the Motor Vehicle Repairs Act 1980. Those adapted considerations are:

- the nature, width and extent of the contraventions

- the loss or damage and prejudice in consequence of the contraventions

- the circumstances in which the contraventions took place

- whether the licensee has been found to have engaged in any similar conduct

- the presence of fraudulent or dishonest intent and deliberation on the part of the licensee

- the extent of carelessness or wilfulness of the conduct

- the efforts made to correct the situation and what measures have been taken by the licensee

- what consciousness the licensee (a) had (b) displayed, of its obligations under the relevant statute and to the owners

- the effect upon the licensee

- antecedents

- attitude, industry history and future compliance

- the penalty range

- any gain made as a result of the contraventions

- the degree of cooperation with the authorities.

34 It can be seen that the size or amount of the damage, that occurs as a result contraventions, are factors taken into account when considering the loss, damage and prejudice flowing from the contraventions, and any gains made as a result. Those issues are relevant to the process of weighing all these factors in order to arrive at an appropriate and fit disciplinary action. They are not, however, determinative of the level of penalty. There is no necessary correlation between them and the ultimate disciplinary action taken. Other factors may be of such weight that they require a higher or lesser penalty. This is especially so in the instance of both the Motor Vehicle Repairs Act 1980 and the Home Building Act 1989, which both have significant consumer protection objectives.

35 In this case I am considering two contraventions by Hargrave, which has a previously unblemished record. I accept that it has a generally good reputation among those with whom it deals, as show by its references. None of the referees appears to have been aware of the substance of the allegations against Hargrave, or of the likely use of their reference in these proceedings. This lessens their weight and value.

36 The contraventions establish poor workmanship and dishonest and unfair conduct with respect to repairs to one vehicle only. Given that Hargrave repairs 70 to 80 cars a month, this is a very small proportion of its business. The financial advantage to be gained by Hargrave was small (under $1,000 given the additional repair costs), but was not received because Hargrave was required to complete the repairs as contracted for by NRMA.

37 The circumstances of both contraventions are of considerable concern. They both involve matters, which are not obvious on inspection, and were only detected when the vehicle was stripped down. The fact that I have found dishonest intent on Hargrave’s part escalates the seriousness of these breaches considerably. Conduct of this nature is not easily detectable by members of the public, who can easily fall prey to motor vehicle repairers who do not do the work, or supply the parts, contracted for. I agree with the Commissioner that this conduct requires significant censure.

38 Hargrave has put in place new quality assurance systems, in order to ensure that below standard work is detected in the future. While that gives me some reassurance, I am concerned at the carelessness and lack of attention to detail which allowed original poor standard work to be completed and checked, then painted and checked, and then released to the customer, without the defects being remedied.

39 Mr Savva said that he and his wife are now spending more time in the office to keep track of the paperwork, in order to make sure that mistakes of the type he said occurred with the estimate and invoice to NRMA do not occur again. Given the conclusion I have reached as to dishonesty this does not reassure me.

40 I have no doubt that Mr Savva is severely embarrassed by the detection of these events, and is concerned both by the penalty imposed and by the impact of adverse findings on his and Hargrave’s good reputation. There is no evidence that Hargrave’s business has suffered.

41 The penalty range available is that set out in section 44. Given Hargrave’s previous good record and that the grounds for taking disciplinary action relate to only one contract, this is not a case where either a suspension or cancellation of Hargrave’s licence would be appropriate. Equally, given the seriousness with which I view Hargrave’s conduct with respect to that one contract, a reprimand will not suffice. I agree with the Commissioner that the nature of the conduct calls for censure, both to deter Hargrave from engaging in similar conduct again and as a general deterrent to the industry at large to make it clear that conduct of this sort will not be tolerated. The imposition of a monetary penalty by way of a contribution to the contingency fund is appropriate. Section 44(2) does not prescribe a maximum contribution that a licensee can be required to pay to the fund. In my view the penalties of $5,000 for each ground imposed by the Commissioner reflect the seriousness of Hargrave’s conduct and are appropriate.

42 I consider that the decision made by the Commissioner was the correct and preferable decision. It will be affirmed.

Orders

The Tribunal makes the following order:

The decision of the Commissioner to take disciplinary action against Hargrave Motor Repairs Pty Ltd and require it to pay a total of $10,000.00 to the Contingency Fund is affirmed.