The Art of Rejection

On 20 January 2021, the NCAT appeal panel published its decision in the matter of Baas v JB Hi Fi Group Pty Ltd.

Key facts

Briefly, on 5 December 2015, the appellant purchased an Apple Mac Air for $1,375.00 which came with a contractual manufacturer warranty period of two years. A little over three years later in early 2019, the appellant began experiencing some difficulties using the trackpad and with the screen "freezing". Initially, the appellant liaised with both JB Hi Fi and Apple in relation to the complaint.  By November 2019, the appleant had become dissatisfied and informed JB Hi Fi that if they continued to ignore the issue the goods could be "rejected" and a "replacement or refund" claimed. In due course, on 13 January 2020, the appellant requested a replacement or refund.  Proceedings were commenced in the NCAT Consumer and Commercial Division seeking a replacement of the laptop plus some minor damages. On 29 June 2020 NCAT ordered both JB Hi Fi and Apple to repair the laptop by replacing the trackpad and restoring the machine to good working order within two weeks. Apple was also ordered to pay the applicant $70.00 in compensation for travel expenses.

Appeal

There were five grounds of appeal but only one succeeded. The appellant successfully argued that the tribunal member had not provided adequate reasons when rejecting the claim for a "replacement or refund".

The statutory framework for a consumer to take action against the supplier of goods is found at sections 259 – 263 of the Australian Consumer Law. Section 259(3)(a) provides that a failure to comply with a consumer guarantee which cannot be remedied, or is a major failure, entitles the consumer to reject the goods provided the rejection period has not ended. If goods are successfully rejected, the consumer is entitled to a replacement or a refund.

In this matter, the appeal panel noted that not every fault or combination of faults entitles the consumer to reject the goods.  The test is objective and relevant considerations are:-

  1. The availability and cost of repairs relative to the purchase price and the nature of the fault; and,
  2. Whether a reasonable consumer with knowledge of the faults (including the time commitment, cost, and degree of difficulty to fix them) would have bought the goods or made a different decision.

The appeal panel was satisfied that the tribunal member had taken an entirely orthodox approach when analysing the legislation to determine that the rejection period had expired. In making that finding, the appeal panel noted that the tribunal member had cited the following reasons:-

  1. The ACL does not set a fixed time period for rejection, instead provides a definition and sets out what matters should be considered;
  2. For a personal laptop, it considered two years to be a reasonable period for the particular problems complained of to manifest.

The appeal panel noted that under the ACL:-

  1. Time runs from the date of "supply" not the date upon which the defect was, or ought to have been, detected;
  2. The relevant failure is the one encountered by the consumer;
  3. The rejection period should consider "within what time would it be reasonable to expect such defects to become apparent?"
  4. The particular consumer's actual experience albeit subject to certain objective criteria, including the use to which the consumer put the goods.

The appeal panel noted that the determination of a 'rejection period' includes an evaluative and discretionary aspect and that the tribunal needs to weigh the mandatory considerations in section 262(2) of the ACL (for example the type of goods and the use to which they are put, amongst other things).

The appeal panel accepted that the tribunal is required to provide reasons for the way it applied the various criteria and considerations when determining this matter.    It concluded that the tribunal had failed to satisfy the requirement to provide adequate reasons. The appeal panel did not challenge the tribunal's finding that their rejection period had expired but remitted the matter back to the tribunal on the following limited issues:-

  1. Whether the appellant rejected the laptop;
  2. If so, whether the rejection period had expired before that rejection; and
  3. What orders are appropriate based on those findings.

Takeaways

Careful consideration is required when assessing the length of a 'rejection period' and should consider: the type of goods; the nature of the defects; and, the use to which those goods have been put by the consumer. Some 'rejection periods' may be quite long and it is certainly worth looking at the length of the manufacturer's replacement warranty.

If you have come to the conclusion that the goods can be rejected, it is important to formally reject the goods at the same time as requesting a replacement or a refund.

 

 

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