Laws 3137 - Australian Consumer Law - Major Essay - Final Copy

LAWS 3137 – AUSTRALIAN CONSUMER LAW FINAL RESEARCH PAPER – SUMMER 2013

Question 2: Discuss the Consumer Guarantees under the Australian Consumer Law and give reasons why the regime will improve consumer redress.

BY: PANDELIS (PETER) TILIAKOS – z3253182 TO: DEBORAH HEALEY

WORD COUNT: The implementation of the Consumer and Competition Act 2010 (Cth)(CCA), and specifically the consumer guarantee provisions within Schedule 1 of the Act, is regarded, from a wide array of socio-legal academics, as a 'revolutionary enactments monumentally altering the consumer law landscape1'. This overwhelming characterisation has chiefly been directed at the 'ground-breaking developments made in the consumer guarantee and redress provisions'2 which have served to significantly enhance consumer rights and remedial options. From a holistic perspective, consumer guarantees provide end users with a comprehensive set of rights for the goods and services they acquire. Under the prior legislative scheme, namely the Trade Practices Act 1974 (Cth) TPA, consumers were afforded 'minimal rights with regards to issues they encountered with the purchase of their goods...[and] effectively had to rely on implied conditions in contract law in order to receive remedial support'3. The introduction of the ACL however has in avertedly provided consumers with definitive consumer guarantees which will have the benefit of providing statutory protections and remedies for any breaches by suppliers and/or manufacturers. In addition to the consolidation of legislative guarantees, the ACL managed to evolve the consumer law regime by providing a single comprehensive series of laws which differed to the prior situation where 'each state upheld its own unique consumer law provisos...causing widespread confusion for consumers and businesses alike' 4. Aside from analysing these specific evolving aspects of consumer law within Australia, this research paper will endeavour to discuss the consumer guarantees relating to acceptable quality, fitness for purpose, matching description, sample/ demonstration model and the requirement to ensure appropriate repair facilities or spare parts. Furthermore, a great range of academic opinion will be incorporated to address the reasons why consumer redress will improve under the current ACL with particular reference to the implementation of clearer redress options through the minor/major failure distinction and the ability for consumers to now seek compensation from manufacturers with greater ease.

1 2 3 4

Brown, A. (2010) Consumer Protection Law in Australian, Lexis Asia Pacific Publications: Canberra, Australia. Ibid, pg. 12. Ibid, pg. 14. Rees, A. (2010) Are you Being Served? New Consumer Guarantees for Services, Melbourne University Law Review: Melbourne, Australia.

Throughout the entirety of Professor Anne Rees publication Are You Being Served? New Consumer Guarantees for Services (2010)5, the learned academic characterises the ‘dynamic nature’6 of the new regime through its ability to ‘amend prior TPA provisions relating to implied warranties for consumer guarantees, [which were] grey/murky/ unfavourable for consumers, [into something] that could definitively safeguard the end user’7. Under the preceding TPA, the provisions relating to consumer guarantees represented ‘a legislative implication’8 insinuating several specified warranties or conditions. Providing the individual could be categorised as a ‘consumer in relation to particular goods’9, assurance was inferred with regards to ‘title, quiet possession, supply by description, quality or fitness and supply by sample’10. Any attempts by a corporation to restrict or modify liability within a contract for breach of one of the implied warranties would make the agreement void. In the event where a supplier contravened an inferred term, the end user would potentially have a claim against the corporation for a breach of contract. Whilst Rees acknowledges the ‘legislations attempts to provide certain safeguards and redress options to consumers’11, the learned author felt obliged to ‘comply with the Productivity Commissions perspective outlined in the 2008 Review of Australia’s Consumer Policy Framework’12. This essentially characterised Australia’s need to adopt a system of statutory consumer guarantees to ‘better assist… provide legislative grounds for redress options’13. Such a recommendation became one of the ‘shining changes in the new regime’ which manifested itself in the newly introduced CCA, and more specifically in s51-9 of Schedule 2, through the implementation of definitive consumer guarantees. Whilst the classification of a consumer in the ACL mirrors that under the TPA, it became legislatively grounded that any term in a contract that purported to exclude, restrict or modify liability for breach of a consumer guarantee became void. In addition to this, the consumer guarantees were now ascribed with a statutory guarantee status ensuring consumers would be legislatively protected if their goods fell within the realm of s51-9 Schedule 2 ACL. Rees acknowledges this alteration to the regime as specifically inclined to ensure consumers will have the benefit of statutory remedies for a breach of the consumer guarantees, instead of relying upon a breach of contract claim. A further benefit to consumers facilitated by the legislative consolidation of consumer guarantees is the fact that consumers are now able to recover damages for a breach of any guarantee providing that it was reasonably foreseeable that the consumer would suffer. This ideological stance represents a wider right than the position under contract law 14 which requires the losses to have reasonably been in the contemplation of the parties.

5 6 7 8

Rees, A. (2010) Are you Being Served? New Consumer Guarantees for Services, Melbourne University Law Review: Melbourne, Australia. Ibid, pg. 120. Ibid, pg. 120. Ibid, pg. 128.

9

A person (including a corporation) will, subject to certain exceptions, be a “consumer” in relation to particular goods and services if: (a) the goods or services are priced at $40,000 or less; or (b) the goods or services are priced in excess of $40,000 but are of a kind ordinarily acquired for personal, domestic or household use or consumption; and (c) in the case of goods, they are not purchased for either re-supply or use in business as part of the production or manufacture process.

10 11 12 13 14

Sloan, S (2011) Consumer Guarantees – Changes to the Trade Practices Act, DibbsBarker Publications: Sydney, Australia. Rees, A. (2010) Are you Being Served? New Consumer Guarantees for Services, Melbourne University Law Review: Melbourne, Australia. Ibid, pg. 149. Ibid, pg. 149. Ibid, ‘breach of an Implied Warranty’.

Taking into consideration the learned opinions of Westmoreland and Hunt in The New Consumer Guarantee Regime Overview – When a Consumer is Entitled to Refund or Replacement (2011), it is evident to notice the fact that under the new Australian Consumer Law regime ‘all Australian consumers will have the same rights and protections throughout Australia…just as businesses will have the same obligations and responsibilities’15. Prior to the commencement of the ACL16, the TPA, and in particular Pt V Divs 2 and 2A, created a series of conditions and warranties that were implied into consumer contracts. These provisos were ‘endorsed theoretically’ by the inclusion of statutory rights of action enabling consumers to seek compensation directly from manufacturers of faulty goods without ‘the need to rely on a contractual relationship with the producer’17. Aside from the federal regulations governing consumer protections and transactions, it is also evident to notice the ‘simultaneous application of an additional 20 State and Territory consumer laws which differed between each jurisdiction’ 18. The respective amalgam of such ‘a multiplicity… [of] wide ranging directives’, led the Productivity Commission’s 2008 Review of Australia’s Consumer Policy Framework to conclude that ‘many minor differences [in fact] existed between the laws of Australian jurisdictions… creating additional costs for businesses and confusion for consumers’ 19. This ideological standpoint was further advanced by the 2009 Commonwealth Consumer Affairs Advisory Council (CCAAC) report titled Consumer Rights: Reforming Statutory Implied Conditions and Warranties which noted ‘the current range and lack of uniformity of Australian laws on implied conditions and warranties leads to confusion and uncertainty… for consumers/ businesses’20. Professor Corones in his publication Consumer Guarantees in Australia: Putting an End to the Blame Game(2009) was typically critical of this consumer rights conundrum and utilised the ‘perplexing predicament in the nations capital…[were] 5 separate laws21 operated/ all aimed broadly at the same thing’22 to highlight the complexities consumers and businesses faced in determining their rights. The requisite course of action detailed in the CCAAC outlined the necessity of facilitating ‘a single, uniform national law to make it simpler, easier and clearer for consumers to understand and enforce their rights’23. These recommendations were transposed to the contemporary ACL provisions summarised in Schedule 2 CCA which were modelled on the consumer guarantees regime contained in the New Zealand Consumer Guarantees Act 1993 (NZ)24. Under these provisions, a single law uniformly enforced across Australia would allow for simpler and clearer provisions mirroring the former TPA act and the earlier State and Territory Fair Trading Acts. Subsequently, court and tribunals across Australia will be able to apply the same law to consumer disputes allowing for clearer avenues of redress and greater consistency in outcomes irrespective of where the dispute occurs or where the court or tribunal is located. Businesses will also be able to profit from these developments as they will only have to comply with one law during trade no matter where in Australia a business is located or where a transaction takes place.

15 16 17 18 19 20 21 22 23 24

Westmoreland, R & Hunt, D. (2011) The New Consumer Guarantee Regime Overview – When a Consumer is Entitled to Refund or Replacement, Penguin Publications: Melbourne, Australia. Ch 3, Pt 3-2 Div 1. Brody, G (2010) Consumer Protection Legislation, Fitzroy Legal Services Publications: Melbourne, Australia. Marie, J.P (2011) The New Consumer Guarantee Law and the Reasons for Replacing the Regime of Statutory Implied Terms in Consumer Transactions , 35 Melbourne University Law Review 252. Ibid. Commonwealth Consumer Affairs Advisory Council (CCAAC) report Consumer Rights: Reforming Statutory Implied Conditions and Warranties(2009). Fair Trading Act 1992 (ACT), Fair Trading (Consumer Affairs) Act 1973 (ACT), Door to Door Trading Act 1991 (ACT), Lay by Sales Agreements Act 1963 (ACT) Corones, S (2009) ‘Consumer Guarantees in Australia: Putting an End to the Blame Game’, Queensland University of Technology, Law and Justice Journal, 137. Explanatory Memorandum to the Trade Practice Amendment (Australian Consumer Law) Act (No2) 2010 (Cth). Ibid, at para [7.8].

The cornerstone of Professor Jeanie Marie’s The New Consumer Guarantee Regime Overview (2011)25 rests upon the academics pursuit to characterise the ‘potentially optimistic effects… [the] newly introduced ACL may have on the socio-legal environ 26’ with particular reference to the remodelled consumer guarantee that ensures goods are of ‘acceptable’ quality when sold to a consumer. Incorporating the landmark NZ judgements Stephens v Chevron Motor Court Ltd27 and Cooper v Ashley & Johnson Motors Ltd28, Marie formulates a holistic understanding that prior to the introduction of the ACL guarantee provisions, the implied condition relating to merchantable quality 29 of goods ‘failed to provide consumers with an adequate protection scheme’ 30. This was attributed to the fact that under both the TPA31 and the Sales of Goods Act32 the scope of basic level of quality ‘reached into any purpose for which the goods would normally be used 33… a restrictive standard that was vastly two dimensional and antithetical to the end users needs’34. Furthermore, under the merchantable quality assessment, goods were required to be defective upon delivery35 so that consumers could obtain redress ‘with only a small possibility of obtaining remedial compensation if the goods became defective within a reasonable period of purchase’36. Under s54(1) ACL, the newly introduced regime altered this position by providing a ‘principles based guarantee’37 by elevating the merchantable quality stipulation to one of an acceptable quality based on what a reasonable consumer would consider suitable having considered all the factors relevant to the sale. In this situation, as opposed to a merchantable quality standard based upon fitness for the individual consumer’s particular purpose 38, the acceptable quality measure ensures fitness for common purpose which does not require the consumer to inform the seller of the purpose for which the goods are going to be used. So long as the purpose is common, a consumer does need to make the purpose known. In essence the common law test for acceptable quality depends on whether a reasonable consumer 39, fully aware of the goods’ condition would find them fit for all the purposes 40 for which goods of that kind are commonly supplied including acceptable in appearance and finish, free from defects, safe and durable. In addition to this, it is evident to notice the extent to which the test takes into consideration the nature and price paid for the goods, any statements about the goods on any packaging or labels, any representations made about the goods or any other relevant circumstances relating to the supply of the goods. Professor Maree concurs with the innovative amendments principally because the focus on fitness for all purposes means that the acceptable quality guarantee has much wider coverage and ultimately represents the ‘consumer friendly cousin of the implied condition of merchantable quality’ 41. In addition to these constructive features of the acceptable quality guarantee, Maree makes numerous references to alternate ‘beneficial aspects of the s54 ACL provision which serve to further emphasise the growing need to protect consumers and provide them with 25 26 27 28 29 30 31 32 33 34 35 36 37

Marie, J.P. (2011) The New Consumer Guarantee Regime Overview – When a Consumer is Entitled to Refund or Replacement, Melbourne University Press: Melbourne, Australia. Ibid, pg. 60. [1996] DCR 1 at [16]. [1997] DCR 170. Grant v Australian Knitting Mills Limited [1936] AC 562. Marie, J.P. (2011) The New Consumer Guarantee Regime Overview – When a Consumer is Entitled to Refund or Replacement, Melbourne University Press: Melbourne, Australia. 1974 (Cth). s 64 Sales of Goods Act 1923 (NSW). Grant v Australian Knitting Mills [1936] AC 85 (Privy Council); Thornett & Fehr v Beers [1919] 1 KB 486; Frank v Grosvenor Motor Auctions Pty Ltd [1960] VR 607. Marie, J.P. (2011) The New Consumer Guarantee Regime Overview – When a Consumer is Entitled to Refund or Replacement, Melbourne University Press: Melbourne, Australia. George Wills and Co Ltd v Davids Pty Ltd & Henry Kendall v William Lillico and Sons Pty Ltd [1969] 2 AC 31. Ibid, pg. 120. Thomas Gault (ed) Gault on Commercial Law (online looseleaf ed, Brookers) at [CG7.04].

38

‘such a quality and in such a state and condition as to be saleable in the market, as being goods of that description, to buyers who are fully aware of their quality, state, and condition, and who are buying them for the ordinary purposes for which goods so described are bought in that market’ – Taylor v Combined Buyers [1924] NZLR 627 (SC).

39 40 41

E v Australian Red Cross Society (1992). Graham Barclay Oysters v Ryan (2000). Marie, J.P. (2011) The New Consumer Guarantee Regime Overview – When a Consumer is Entitled to Refund or Replacement, Melbourne University Press: Melbourne, Australia, pg 123.

options for redress if required’42.Second-hand goods, for instance, sold in trade or commerce are covered by the guarantee of acceptable quality, but age, price and condition must be taken into account. Whilst the provision provides protection for a wide range of instances categorised as falling within the acceptable quality measure, the author makes particular references to certain scenarios that consumers will not be safeguarded. This is principally showcased in the instance where a consumer is alerted to defects in goods before sale and is therefore unable to claim remedies if those particular defects cause problems with the goods. In addition to this, a consumer is also not entitled to remedial response if they had an opportunity to examine the goods before purchase and did not find defects that they should have noticed. The guarantee of acceptable quality will also not apply if the consumer uses the goods abnormally, causes the quality of the goods to become unacceptable or fails to take reasonable steps to avoid the quality becoming unacceptable.

42

Ibid, pg. 125.

In The Australian Consumer Protection – Is it really a new era of consumer protection? (2011), Jacqueline Downes offers a pessimistic outlook with regards to the ‘supposed revolutionary scheme’ but ultimately concurs with the ‘wider ranging application of the guarantee as to fitness for any disclosed purpose summarised in s55 ACL’ 43. For the duration of the earlier stages of her academic publication, the learned author exemplifies the ‘extensive application of the TPA provisions’44 and their ability to provide both consumers and businesses with ‘an all inclusive guide to the commercial landscape’ 45. A particularly noteworthy illustration of such an ideological stance manifests itself with the learned academics concurrence of imposing s71 in an attempt protect consumers in receiving goods fitting their intended purposes 46. Whilst her opinion of ‘a great deal of the ACL provisions remains unenthusiastic’47, it is evident to notice Downes’ jurisprudential acquiescence with the newly imposed s55 ACL which innovatively ‘turns the implied condition in the TPA to something more solid...guaranteed under statute for consumer safeguarding’48. This is accomplished in the respective provision through the seemingly two-pronged protective basis afforded to consumers in instances stemming from the purchasing of goods for a specified purpose. In the first instances, s55(2) provides the TPA like assurance that goods will be reasonably fit for any disclosed purpose purported or disclosed by the end user. In this sense, and in accordance with Carey-Hazell v Getz Bros & Co (Aust) Pty Ltd49, consumers will simply be required to inform the supplier at the point of sale50, either expressly or by implication, of the purpose for which they require the goods so as to be granted consumer redress if the items fail to meet its intended purpose. A particularly noteworthy example of this is highlighted in the Explanatory memorandum 51 where a consumer asking for a pair of walking shoes is ‘sufficient to give the consumer the benefit of a guarantee that shoes subsequently supplied are fit for that purpose’ 52. In the words of Downes, the crucial development facilitated by the ACL with regards to affording consumers protection for goods purchased with a purpose manifests itself in the second limb of protection envisaged in s55(1). Under this secondary means of protection, a supplier, or any ‘person by whom any prior negotiations or arrangements in relation to the acquisition of the goods are made’, will be liable in the instance where they represent to a consumer that certain goods will be reasonably fit for a specified purpose, but are not. For consumers, this specified addition to the consumer protection legislation represents a ‘monumental shift in power… no longer will businesses be discounted liability in the instance where they tell a customer a good fulfils a certain need but ultimately fails in this regard’53. A ‘clever example of this is manifested in the explanatory memorandum’ 54 in the instance where a diver buys a watch which the supplier says will be suitable for diving but a couple of weeks later, when the individual takes his first dive into water, the new watch is filled with water. Downes classifies this situation as an appropriate scenario where the consumer will have the right to be reimbursed from the supplier. Whilst s55’s twin protection clauses provide a significant basis for protecting consumers, it is also evident to notice some of the less favourable aspects of the provisions that do not necessarily sway in the favour of the end user. Incorporating a unique dualistic approach with regards to the 43 44 45 46 47 48 49 50 51 52 53 54

Downes, J. (2011) The Australian Consumer Protection – Is it really a new era of consumer protection?, 19 AJCCL 5, 19. Ibid, pg. 149. Ibid, pg. 149. Henry Kendall & Sons v William Lillico and Sons Ltd [1969] 2 AC 31 & Ashington Piggeries v Christopher Hill Ltd [1972] AC 441. Ibid, pg. 150. Ibid, pg. 151. (2004) ATPR 42-014. Nesbit v Porter [2000] NZLR 465. Explanatory Memorandum, Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010 (Cth). Ibid, at para [7.40]. Downes, J. (2011) The Australian Consumer Protection – Is it really a new era of consumer protection?, 19 AJCCL 5, 19. Explanatory Memorandum, Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010 (Cth).

decisions in Ryan v Great Lakes Council55 and Graham Barclay Oysters v Ryan56, Downes classifies the fact that whilst most consumers rely on the skill and judgement of the supplier in selling goods that will assist the consumer in achieving the purpose they have, there are instances where the reliance upon such advice is unreasonable. In addition to this, there are instances where a consumer does not rely on the supplier’s skill or judgment and can therefore claim no redress such as in Golden Fleece Petroleum Ltd v Avis Rent a Car System57. In this scenario Golden Fleece required a prime mover from Avis to move a tanker of petrol. When Golden Fleece attempted to couple the prime mover to the tanker it was discovered that it was not completely compatible and this misalignment increased instability. An accident occurred and Golden Fleece attempted to argue that the primer was not fit for its purpose. The court dismissed these claims 58 as Golden Fleece had not relied on the skill or judgment of Avis; it had simply stated that it needed a prime mover and that is what it received.

55 56 57 58

[1999] ATPR 46-191. (2000) 177 ALR 1; ATPR (Digest) 46-207. (1983) ATPR 40-409. at ATPR 44,770.

Whilst an extensive array of socio-legal academics59 have commended the developments of the CCA, and in particular its ability to reinforce/clarify certain consumer guarantees now residing in Schedule 2, it is also evident to notice the ‘beneficial outcomes arising from newly introduced provisions such the guarantee as to repairs and spare parts’60. Taking into consideration the learned opinions of Westmoreland and Hunt in their publication The New Consumer Guarantee Regime Overview (2011), it is evident to notice ‘the TPA’s silence… when it comes to providing consumers with some assurance that suppliers are able to repair or service faulty goods if need be’ 61. For the respective authors, too much reliance was invested into ‘the working of common law62…which itself was delved in murky waters and failed to provide consumers with solid ground with regards to repairing/ servicing their goods’63. The Productivity Commissions 2008 Review of Australia’s Consumer Policy Framework64 however ‘put the wheels in motion for the development of s58 ACL’. Under the current s58 provision, manufacturers are under a legal obligation to take reasonable steps to provide consumers with spare parts and repair facilities for a reasonable time after purchase. In accordance with the Explanatory Memorandum65, this key stipulation within s58 necessitating/compelling suppliers to ensure repair facilities are available after purchase is particularly critical in instances where consumers have in fact spent a considerable amount of money acquiring the goods. One must simply look at the analysis of the recently decided Harper v Toyota Automotive Group [2011] by Professor J.W Carter to understand the ‘logicality of holding suppliers or manufacturers accountable in situations where restorative facilities are unavailable for goods such as cars and boats that would normally cost an average person a fortune’ 66. Carter maintains this line of thought and makes a considerable contribution with regards to the reasonability test applied to situations within the realm of s58. In accordance with the respective author, reasonability will depend solely on the nature and type of goods being supplied by a supplier. For example, it would be reasonable to expect that tyres for a new care will be available for many years after its purchase. It may not however be reasonable to expect that spare parts for an inexpensive children’s toy are available at all. Whilst this reasonability test is perceived by many as ‘the appropriate ground for/ assessment’67, there has been considerably widespread criticism levelled at the legislator’s ability to ‘put a price tag on a goods personal value/utility’68. According to this school of thought, suppliers should be required to provide repair facilities and spare parts for all goods they sell for a statutory defined period of seven years or provide monetary compensation. Furthermore, individuals such as the likes of Marie have also commented on the inability to find a ‘reasonable ground for assessment… what might be reasonable for one person may be different to another’69. The respective academic places particular emphasis on common scenarios such as when an individual purchases a vehicle expected to last him a decade whilst a wealthier person may only use it for six months. Academics have also been critical of the provision in the sense that a manufacturer or importer does not have to meet the guarantee on repairs and spare parts if they advise the consumer in writing, at the time of purchase, that repair facilities and spare parts would not be available. With particular reference to Maher v Grant [2011], it is evident to notice that in some instances consumers 59

Carter, J.W. (2011) Contract and Consumer Law – A Guide, Butterworths: Melbourne, Australia & Corones, S (2011) Australian Consumer Law: Commentary and Materials 4 th Edition, Thomas Reuters: Melbourne, Australia.

60 61 62 63 64 65 66 67 68

69

Ibid, pg. 45. Westmoreland, R & Hunt, D. (2011) The New Consumer Guarantee Regime Overview – When a Consumer is Entitled to Refund or Replacement, Penguin Publications: Melbourne, Australia. Discussed in Graham Barclay Oysters v Ryan (2000) and Bethune v Qconn [2002]. Ibid, pg. 81. Ibid, pg. 149. Explanatory Memorandum, Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010 (Cth). Carter, J.W. (2011) Contract and Consumer Law – A Guide, Butterworths: Melbourne, Australia Ibid, pg. 31. Rees, A. (2010) Are you Being Served? New Consumer Guarantees for Services, Melbourne University Law Review: Melbourne, Australia Marie, J.P. (2011) The New Consumer Guarantee Regime Overview –When a Consumer is Entitled to Refund or Replacement, Melbourne University Press: Melbourne, Australia

are almost forced into these agreements particularly with goods that ‘take up so much of our day to day living… completely unfair that in such instances suppliers may be relieved of their obligations’70. Pearson and Fisher, in their publication Commercial Law: Commentary and Materials (2010)71, provide a comprehensive examination of the correspondence with description provision within Schedule 2 CCA by ‘isolating/ scrutinising the various means by which the section seeks to protect consumers in instances where a good fails to match its description’72. Under the preceding TPA, the basic premise with regards to goods corresponding with a description under s70 was that a buyer should get goods of that identity for which he or she bargained. This underlying ideological presupposition was transposed legislatively in the form of an implied condition within a contract for the supply of a respective class of goods. Whilst Pearson and Fisher take an affirmative stance with the ‘legislators vibrant attempts to safeguard consumer rights/ particularly in instances relating to catalogue or television advertisements’ 73, multiple common law scenarios74, including that of Ashington Piggeries v Christopher Hill75, highlighted the ‘necessity of rewording the provision to avoid interpretive confusion/ providing solid legal assurance for consumers’76. In its current modified guise, the s56 ACL provision conclusively assures that where consumers purchase goods through a description of those goods, the eventual goods received must correspond with that description. Despite the ‘obvious similarities between the TPA and ACL protection measures’, the authors of Commercial Law: Commentary and Materials (2010)77 commend the legislations technique of separating the provision into three specific measures seeking to ensure consumers receive goods that match their initial description. At the outset, s56(1) provides consumers with the overarching basis for seeking redress if the goods the individual had agreed to buy do not match their description with regards to colour, size or kind when a seller deals in goods of that description. This ideological stance manifests itself throughout the entirety of Ashington Piggeries v Christopher Hill78 and in particular through Diplock’s assertion that ‘by describing the goods that are to be the subject of the contract the buyer makes it known to the seller by implication that the goods are required for one of the purposes for which the goods of that description are normally required…by selecting a seller who makes it his business to supply goods of that nature, the buyer shows his reliance’ 79. In addition to this situation, it is also relevant to take into consideration s56(2) and the extent to which the guarantee to match description applies regardless of whether or not the consumer selected the goods or not. This aspect of the provision is particular crucial in the sense that suppliers are unable to sell goods that are differentiated to their description purely on the basis that the consumer had reasonably inspected the goods prior to finalising the purchase80. The newly implemented provision alternatively, in accordance with s56(3), provides consumers with a ‘dualistic redress avenue…in instances where the supplier provides both a description and a sample/demonstration model to an end user as the basis of a commercial transaction’81. Under these circumstances, a supplier would 70 71

72 73 74 75 76 77 78 79 80 81

Ibid, pg. 141. Pearson, G., Fisher, S., Pedan, E & Tolhurst, G.J. (2010) Commercial Law: Commentary and Materials, Thomas Reuters: Sydney, Australia. Marie, J.P. (2011) The New Consumer Guarantee Regime Overview –When a Consumer is Entitled to Refund or Replacement, Melbourne University Press: Melbourne, Australia Pearson, G., Fisher, S., Pedan, E & Tolhurst, G.J. (2010) Commercial Law: Commentary and Materials, Thomas Reuters: Sydney, Australia. Australian Knitting Mills v Grant (1933) 50 CLR 387, Elder Smith Goldsbrough Mort Ltd v McBride [1976] 2 NSWLR 631 and Harlington & Leinster Enterprises v Christopher Hull Fine Art [1990] 3 WLR 13. [1972] AC 44. Pearson, G., Fisher, S., Pedan, E & Tolhurst, G.J. (2010) Commercial Law: Commentary and Materials, Thomas Reuters: Sydney, Australia. pg. 793-4. Pearson, G., Fisher, S., Pedan, E & Tolhurst, G.J. (2010) Commercial Law: Commentary and Materials, Thomas Reuters: Sydney, Australia. Ashington Piggeries v Christopher Hill Ltd; Christopher Hill Ltd v Norsmildmel (Conjoined appeals) [1972] AC 441 (House of Lords). Ibid, at [505]. Competition and Consumer Act 2010 (Cth) Schedule 1 s56(2). Pearson, G., Fisher, S., Pedan, E & Tolhurst, G.J. (2010) Commercial Law: Commentary and Materials, Thomas Reuters: Sydney, Australia.

breach both s56 and 57 by providing a misleading or false description of the goods as well as a demonstration model or sample that is either inaccurate or unsubstantiated in the final good. This scenario was at the forefront of the recently decided case Doolan v Bayer Australia Ltd82where a supplier breached both the description and sample provisions within the ACL and subsequently has to provide remedial response to the consumer.

Incorporating the scholarly opinions of Farrell and Clarke in Additional Protections For Consumers (2011)83, and in particular their well renowned critique of Rasell v Cavalier Marketing84, it is evident to notice the ‘significant legislative changes to Australian consumer law’85 facilitated through the implementation of the ACL and in particular the ‘consolidation of the guarantee to supply goods by sample and demonstration model’ 86. Prior to the implementation of Schedule 2 CCA, the TPA afforded consumers an implied protection in the instance where, during the course of trade or commerce 87, they purchased goods which did not correlate88 with ‘the sample they viewed in the showroom or on the shelf’89. In accordance with s72 TPA, and with regards to Street’s commentary LG Thorne & Co Pty Ltd v Thomas Borthwick 90, this was facilitated in instances where ‘the bulk of the goods did not correspond with the sample in quality even after the parties appeared to have set down the terms in the contract, whether implied or express, and/or had the reasonable opportunity to inspect’ 91. Under the guidance of the Productivity Commissions 2008 Review of Australia’s Consumer Policy Framework, the newly imposed s5792 managed to provide a ‘reworded/ more easily understood version of its predecessor in the TPA… [whilst] transforming the implied condition to a legislatively backed guarantee that goods match the sample’93. In addition to these ‘comprehensive modifications’94, Farrell and Clarke provide extensive detail with regards to the ‘guarantees ability to not only protect instances where goods are purchased on the basis of a sample… [but] alternatively when a demonstration model is used to entice consumers’ 95. Under its current guise therefore, so that an end user may be afforded this legislatively backed guarantee, a consumer must firstly be supplied, during trade or commerce, a good or goods by reference to a sample or demonstration model 96. Once this scenario is vindicated, in accordance with Farrell and Clarke’s critical appraisal of the respective provision, a failure to correspond with the represented sample may substantiate itself in three specific instances. With regards to s57(1)(c), the end users goods must correlate with the quality, state or condition of the goods which were initially represented by the supplier. This particular instance was deliberated in Ashington Piggeries v Christopher Hill97 and in particular during Diplock’s judgement which decided that ‘the bulk shall correspond with 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97

Doolan v Bayer Australia Ltd and Anor [2012] FCMA 833. Farrell, J & Clarke, J. (2011) Additional Protections For Consumers, LexisNexis Australasia Press: Melbourne, Australia. (1991) ATPR 41-152. Ibid, pg. 129. Ibid, pg. 140. Graham Barclay Oysters v Ryan (2000) 102 FCR 307. Ashington Piggeries v Christopher Hill [1972] AC 441. Ibid, pg.144. [1956] SR (NSW) 81 at [87]. Ibid, at [89]. Schedule 2, Competition and Consume Act 2010 (Cth). Farrell, J & Clarke, J. (2011) Additional Protections For Consumers, LexisNexis Australasia Press: Melbourne, Australia. Ibid, pg. 154. Ibid. s 57(1)(a). [1972] AC 411 at [514].

the sample in quality…[and in particular] the characteristics which would be apparent upon physical inspection of the samples’98. In addition to corresponding quality standards between the good provided to the end user and the one showcased in the sample discussed in Ashington Piggeries v Christopher Hill99 , s57(1)(e) affords the protection that goods are free from any defects that would not be apparent on reasonable examination of the sample and would cause the goods not to be of acceptable quality 100. This was particularly the case in LG Thorne & Co Pty Ltd v Thomas Borthwick101 where ‘it was the common understanding of both parties that the plaintiff was buying as a result of its inspection of the samples and would not have bought unless they had been satisfactory and complied with the requirements free of hidden defects making the good unmerchantable in quality’102. Cooper’s testimony in Cavalier Marketing v Rassell103 provides appropriate guidance with regards to the s57(1)(e) provision which affords consumers with a dual protection not only with regards to goods matching their represented sample, but also any description that was provided by the supplier (s56 ACL). In the afore stated case, there was evidence that the carpet at the time that it was laid was satisfactory as to its appearance and its correlation with the sample. After some weeks however the unsatisfactory transformation in the appearance of the carpet became visible to the end user who was initially told by the supplier would last a lifetime. Aside from the obvious unmerchantable quality of the good, the carpet failed to match the sample provided by the supplier and alternatively the description afforded at the place where the purchase was complete. Farrell and Clarke in Additional Protections For Consumers (2011)104 conclude that ‘the only downside for consumers with regards to this guarantee is the fact that it does not cover sales by auctions’. This however is easily understood as the goods are not so easily accessible and therefore cannot be reasonably inspected as to their quality.

98 99

Ibid, at [514]. [1972] AC 411 at [514].

100 101 102 103 104

Rasell v Cavalier Marketing (Australia) Pty Ltd (1991) ATPR 41-152. [1956] SR (NSW) 81. Ibid, at [87]. (1991) ATPR 41-152. Farrell, J & Clarke, J. (2011) Additional Protections For Consumers, LexisNexis Australasia Press: Melbourne, Australia.

Taking into consideration the learned opinions of Westmoreland and Hunt in The New Consumer Guarantee Regime Overview – When a Consumer is Entitled to Refund or Replacement (2011)105, it is evident to notice the wide ranging consumer redress options which are typically dealt with throughout Part 5.4 Division 1 Schedule 1, Competition and Consumer Act 2010 (Cth). As mentioned previously, prior to the implementation of the ACL, the notion of consumer guarantees was 'essentially a non-existent phenomenon...[as the] TPA provided consumers with limited rights [through] implied warranties with regards to the purchase of goods/services'106. In this sense, and as highlighted in Ashington Piggeries v Christopher Hill107, consumers were afforded relief under contract law which in many instances was 'difficult to ascertain for everyday individuals in light of high litigation costs/stress'108. The introduction of the ACL, in the words of the afore stated authors, 'revolutionised the remedial options for end users' 109 as consumers were now able to rely upon statutory remedies110 against a supplier for any breaches associated with the consumer guarantees now protected under the act providing the goods were supplied 111 in the course of trade or commerce112. In this sense, consumers now have the right to redress dependant on which consumer guarantee was breached and whether the problem with the good/ service is minor or major. An understanding of Appendix 1, Figure 1 allows for a better understanding as to who a consumer should seek redress from depending on the type of consumer guarantee was breached. Under s259 ACL, if failure is perceived not to be within the category of ‘major failure’, the usual remedy for a consumer is to require the supplier to address the problem within a reasonable time, which itself is dependant on the circumstances of the breach113. In the scenario where a consumer requests a remedy from the supplier in the instance where the failure is deemed minor and can be remedied, the producer may choose between providing a refund, replacement or repair 114. If the supplier does not provide the end user with an appropriate remedial response within a reasonable time, the consumer may either have the goods repaired and have the supplier pay for the repair or purchase a replacement unit and seek indemnification from the supplier afterwards115. Alternatively, in some circumstances, it would also be appropriate to provide remedial response in the instance where a consumer suffers losses as a result of a failure of a supplier to comply with guarantees 116. This type of consequential loss however must be foreseeable to result from the failure. If the failure to comply with the guarantee cannot be remedied a consumer may in turn reject the goods or seek compensation for the reduction in the value of the goods below the price paid. In accordance with s260 ACL, a major failure will occur if the goods are unsafe, significantly depart from their description, would not have been acquired by a reasonable consumer who was acquainted with the issue, substantially unfit for their purpose or a disclosed purpose made known to the consumer prior to purchase and cannot be remedied within a reasonable time or if the goods cannot be reasonable expected to deliver a result made known to the consumer prior to purchase. In such a scenario, a consumer may choose to reject the goods or seek a replacement or refund from the supplier. If in the instance a consumer returns goods to a supplier, the supplier must provide the remedy that the 105

Westmoreland, R & Hunt, D. (2011) The New Consumer Guarantee Regime Overview – When a Consumer is Entitled to Refund or Replacement, Penguin Publications: Melbourne, Australia.

106

Ibid, pg 102.

107

(1972) AC 411.

108

Brody, G (2010) Consumer Protection Legislation, Fitzroy Legal Services Publications: Melbourne, Australia.

109

Westmoreland, R & Hunt, D. (2011) The New Consumer Guarantee Regime Overview – When a Consumer is Entitled to Refund or Replacement, Penguin Publications: Melbourne, Australia.

110

Competition and Consumer Act 2010 (Cth) Schedule 1, Item 1: Chapter 5, Part 5-4, Division 1, s258.

111

Graham Barclay Oysters v Ryan (2000) 102 FCR 307.

112

Rasell v Cavalier Marketing (Australia) Pty Ltd (1991) ATPR 41-152.

113 114 115 116

Competition and Consumer Act 2010 (Cth) Schedule 1, Item 1: Chapter 5, Part 5-4, Division 1s 259(2)(a). Competition and Consumer Act 2010 (Cth) Schedule 1, Item 1: Chapter 5, Part 5-4, Division 1s 261. Competition and Consumer Act 2010 (Cth) Schedule 1, Item 1: Chapter 5, Part 5-4, Division 1 s 259(2)(b)(i). Competition and Consumer Act 2010 (Cth) Schedule 1, Item 1: Chapter 5, Part 5-4, Division 1s 259 (4).

consumer has chosen117. If the consumer chooses a refund after rejecting goods, the supplier is specifically precluded from providing replacement goods to satisfy the requirement for a refund118. The property in goods rejected revests in the supplier as soon as the consumer notifies the supplier of the rejection which ensures that any risk to the goods from that time onwards is borne by the supplier 119. In addition to the consumer redress options available to consumers with regards to potential breaches of consumer guarantees by suppliers, it is also evident to notice the extent to which end users may now be able to rely upon statute to facilitate remedial response from manufacturers with regards to a specific category of breached guarantees. In accordance with the explanatory memorandum accompanying the introduction of the ACL provisions, it is evident to notice the extent to which a consumer may recover damages directly from the manufacturer of goods with respects to failures to ensure acceptable quality, correspondence with description (if a description was applied by or on behalf of the manufacturer), availability of repairs and spare parts, and compliance with express warranties120. The damages that are recoverable from a manufacturer of goods include the reduction in value of goods below the lower of the price paid or the average retail price of the goods at the time of supply. This ensures that manufacturers are not required to provide excessive compensation to consumers if suppliers charge high prices for their goods121. The damages payable by a manufacturer to a consumer also cover losses that were reasonable foreseeable as a result of the failure 122. To avoid doubt, the cost of returning goods or inspecting them to determine the cause of a failure is to be considered reasonably foreseeable as a result of failing to comply with a guarantee 123. A manufacturer however is not required to pay damages to a consumer if the consumer has required the manufacturer to provide a repair or replacement under an express warranty unless the manufacturer has refused to provide a repair or replacement, or has failed to do so within a reasonable time124. In addition to this, a manufacturer is not required to pay damages to a consumer if an act, default or omission or representation made by some other person, not being an employee or agent of the manufacturer, resulted in caused goods to be of less than acceptable quality 125. A manufacturer is also not liable to provide damages if a failure to comply with the guarantee as to acceptable quality results from a cause independent of human control that occurs after the goods left the control of the manufacturer126.

117 118 119 120 121 122 123 124 125 126

Competition and Consumer Act 2010 (Cth) Schedule 1, Item 1: Chapter 5, Part 5-4, Division 1s 260. Competition and Consumer Act 2010 (Cth) Schedule 1, Item 1: Chapter 5, Part 5-4, Division 1s 263(5). Competition and Consumer Act 2010 (Cth) Schedule 1, Item 1: Chapter 5, Part 5-4, Division 1s 263. Competition and Consumer Act 2010 (Cth) Schedule 1, Item 1: Chapter 5, Part 5-4, Division 2, s271(1), 271(2), 271(3) and 271(5). Competition and Consumer Act 2010 (Cth) Schedule 1, Item 1: Chapter 5, Part 5-4, Division 2, s272(1)(a). Competition and Consumer Act 2010 (Cth) Schedule 1, Item 1: Chapter 5, Part 5-4, Division 2, s 272(1)(b). Competition and Consumer Act 2010 (Cth) Schedule 1, Item 1: Chapter 5, Part 5-4, Division 2, s 272 (3). Competition and Consumer Act 2010 (Cth) Schedule 1, Item 1: Chapter 5, Part 5-4, Division 2, s271 (6). Competition and Consumer Act 2010 (Cth) Schedule 1, Item 1: Chapter 5, Part 5-4, Division 2, s 271(2)(a). Competition and Consumer Act 2010 (Cth) Schedule 1, Item 1: Chapter 5, Part 5-4, Division 2, s271(2)(b).

In conclusion, it is quite evident indeed to notice the overwhelming alterations that have been facilitated by the decision to repeal the TPA and replace it with the CCA. Of the more recognisable developments to the commercial landscape has been the implementation of legislatively protected consumer guarantees serving to enhance consumer redress in instances where the goods they purchase do not meet an appropriate level of quality or description. This scenario is completely different from the prior TPA provisions which implemented implied warranted that could be enforced through contract law. In addition to this, the introduction of the ACL has managed to provide a single uniform consumer law program that is both clear and equal throughout the various states and territories of Australia. These beneficial aspects of the legislative change, and a host of others, have been reflected throughout the entirety of the prior discussion of consumer guarantees relating to acceptable quality, fitness for purpose, matching description, sample/demonstration model and requirement to provide repair and spare part facilities. These provisional adjustments have alternatively provided consumers with improved redress options through the introduction of the major/minor failure distinction as well as the consumers legislatively protected right to be indemnified by the manufacturer in instances where the end user is not at fault.

APPENDIX 1 Figure 1.1