nosection
English

Consumer claims case studies 

The following case studies reflect decisions made by the former Consumer, Trader and Tenancy Tribunal, which became the Consumer and Commercial Division of NCAT from 1 January 2014.

These case studies should not be viewed as precedents.  They are provided as a general guide only and should not be treated as legal advice or relied upon as such.  All Tribunal matters are determined on the merits of the individual case and the supporting evidence.

Education 

Course cancellation

A group of 19 international students enrolled in a Certificate III in Aged Care course run by a NSW education provider.  The qualification would enable the students to work in the aged-care sector such as in nursing homes, hostels or community run aged-care services.  The course was advertised and promoted by an agent who collected the students’ fees and arranged for their enrolment.

Midway through the semester, the course provider suspended the Aged Care Certificate course without explanation.  Some of the students had completed the course before it was suspended, however the course provider refused to issue certificates to those students.  The remaining students were only part way through their course and did not know when or if they would be able to resume and complete their studies.

The students lodged an application at the Tribunal for orders that the course provider either resume the course or refund the course fees.  Further orders were sought for the course provider to give certificates to those students who had completed the course.

After hearing evidence from the students, the agent and the course provider, the Tribunal found that the course was suspended as a result of a commercial dispute between the agent and the course provider.  Provisions under the Consumer Claims Act 1998 allowed the Tribunal to find against both the agent and the course provider.  Orders were then made that the course provider issue certificates to the four students who had completed the course, and that the agent refund the course fees to the 15 students who had not completed the course.

Tutoring services

A man with a teenage son studying for his HSC engaged the services of a local mathematics tutoring service. The father was asked to pay the company a $500 deposit.  He was informed via email that he would be contacted by a post-graduate university student to organise a time to begin the tutoring.  Three weeks had passed and no contact had been made.  The father tried to contact the tutoring service by telephone and email and did not receive a response.

The father then lodged an application at the Tribunal seeking the return of the deposit as the services promised by the tutoring organisation had not been supplied.

At the hearing, only the father had appeared and no one from the tutoring company attended.  The Tribunal Member was satisfied that the tutoring company had been notified of the hearing and that the matter could proceed in the absence of the company.  After hearing the father's evidence, the Tribunal Member found that the tutoring company failed to provide the services it agreed to and made an order directing the tutoring company to pay the father the sum of $500 immediately.

The tutoring company did not comply with the order and the father requested a certified copy of the Tribunal order to enable him to take enforcement action in the Local Court.

Go to top of page iconTop of page

Furniture and furnishings 

Leather lounge suite

A couple purchased a new three-piece matching leather lounge suite for their home from a furniture retailer.  Soon afterwards, defects were discovered with two of the lounges and both were returned to the retailer for repairs.  One lounge was repaired satisfactorily, however the second lounge had to be returned several times for further repairs.  After the fourth repair, the lounge was returned to the couple with new leather and timber inserts.  However changes were made that altered the lounge’s appearance, and the colour of the new timber and leather no longer matched the other two lounges.

The couple applied to the Tribunal for a full refund of the amount paid for the lounge suite.  At the hearing the couple gave evidence that the goods for which they had paid, being a lounge suite with all three parts matching in design, material and colour, was not what they had received.  In response, the retailer denied any liability for a refund, stating that the couple saw the final repairs at the shop.  The retailer claimed that this was an acceptance of the repairs and in effect this amounted to a ‘waiver’ in respect of any difference to the other lounges.

The Tribunal Member decided that when the couple inspected the final repairs at the retailer’s premises they would not have been in a position to identify the extent of the colour difference of the leather, and would not have been in a position to compare the differences in the timber insert panels.  The inspection of the lounge therefore could not amount to a waiver or an acceptance of the defects in the seat, and consequently failed to satisfy the terms of the agreement between the parties.

The Tribunal Member found that the retailer had an obligation to supply the couple with a matching three-piece lounge piece and that what had actually been supplied was in breach of that obligation, despite the various repairs which had been carried out.  Final orders were made for the retailer to pay the couple a full refund and to collect the defective lounge suite from the couple’s home within three weeks.

Carpet

A woman wanted to purchase new carpet for her home and visited a local carpet showroom.  She explained to the salesperson that she wanted a carpet that would not ‘shade’ or leave ‘impressions’ when furniture was placed on it or when vacuumed. 

The woman was provided with a free measure and quote, and the salesperson helped her select a carpet.  At that time, she again asked about shading and the salesperson assured her that the carpet was of ‘high quality’ and would not shade.

Soon after the carpet installation the woman discovered the carpet was shading and her furniture made impression marks.  She immediately contacted the carpet showroom and a representative attended her property.  He confirmed that the carpet was shading but explained this was because she had selected a ‘cut pile’ carpet which was prone to shading.  The representative also said this information was provided on her invoice.  He also denied that the salesperson had misled her about the characteristics of the carpet.  The woman then lodged an application with the Tribunal for a full refund.

During the Tribunal hearing, the woman provided evidence from a carpet consulting service that showed that the type of carpet installed was a plush cut pile which was subject to shading.  The report recommended twist pile or loop pile carpets to avoid shading.  The woman’s daughter also gave evidence that she was present at the home during the free measure and quote and overheard her mother tell the salesperson several times that she did not want a carpet that shaded or left impressions.

The Tribunal considered the evidence and was satisfied that the woman had been sold a carpet that did not match the characteristics of the goods as described by the salesperson.  The Tribunal found that the trader had breached section 49 of the Fair Trading Act 1987 by misleading a customer as to the suitability of the carpet.  Orders were made for a full refund and for the removal of the carpet by the trader.

Go to top of page iconTop of page

Leisure and fitness 

Gym membership

A young woman entered into a 6-month gym membership at her local fitness centre, and signed a direct debit authority for the fees to be deducted monthly.  At the end of the 6 months the woman chose not to renew her membership, believing that was the end of the matter.

However the fitness centre continued to deduct a monthly fee from her bank account.  When she rang the fitness centre to complain, they stated that her contract was ongoing.  They also explained that she needed to provide the fitness centre with 1-month's notice to cancel her membership and that a cancellation fee was payable.

The woman made an application to the Tribunal seeking orders for a refund of overpaid membership fees debited from her account after the expiration of the membership.

At the Tribunal hearing, the fitness centre gave evidence that the woman was informed a number of times of the gym membership conditions, including the cancellation policy.  The Tribunal Member found that the gym membership contract clearly states that it expired after 6 months and that there was nothing in the membership terms to provide that the membership was ongoing nor any details as to the cancellation policy.  The Member found that the woman was not liable for any fees beyond the term of her membership and made orders for a refund of the fees charged beyond the term of the membership.

Go to top of page iconTop of page

Entertainment 

In consumer claims, the Tribunal will determine the terms of an agreement between two parties and, in particular, look at what promises were made by the parties and whether those promises have been honoured.  If it is found that a breach of the agreement has occurred, the Tribunal can determine the level of damages that should be awarded to the aggrieved party.

Harbour cruise

A young woman celebrated her 21st birthday with family and friends on a Sydney Harbour cruise.  She had paid for 42 people at the cost of $65 per head and verbally requested that a DJ play music, high quality champagne and other alcoholic drinks be served, and for a projector to be made available to display photographs and a home-made video.  However, on the night the young woman was very disappointed with the services provided.  In addition, there were two other buck’s party groups on the same cruise boat which were extremely disruptive to her party.

The young woman applied to the Tribunal seeking compensation from the harbour cruise operator, claiming that she received a reduced level of service and should only have to pay $40 per head.  At the hearing the young woman and her mother gave sworn evidence about the events of that night.  It was claimed that there was no DJ in attendance as agreed and instead they had to go downstairs to ask the cruise director to change the CD.  They also complained about the cleanliness of the boat and the poor quality of drinks served.  The woman also stated that she had specifically told the cruise operator that she would not go ahead with the booking if there was a buck’s party on the same cruise, as her party was a family event with elderly relatives and young children.  The cruise operator denied these claims stating that he personally provided the DJ service on that night and that other quality drinks were available upon request.  He also denied that the young woman ever specified that she objected to buck’s parties booking on the same cruise boat.

It became clear to the Tribunal Member that the young woman’s expectations of the service provided was clearly different to the cruise operator’s in relation to the music, the quality of alcohol served and projection facilities.  It was found that because the contact between the parties was unclear as to the exact terms of the agreement, the woman thought she would be getting one type of service where the operator thought he was providing another.

The Tribunal Member preferred the evidence of the young woman about her intention not to proceed if the cruise also included a buck’s party.  The Member commented that it was difficult to accept that a young woman would agree to share her 21st birthday celebrations with two separate groups of men with the attendant revelry normally associated with such parties.

The Tribunal Member decided that the cruise operator had breached the terms of the agreement.  From the evidence it was clear that the operator understood that it was a term of the agreement that there would not be a buck’s party booked on the same evening as the young woman’s 21st birthday party.  Final orders were made that a $15 reduction per head should be given for that breach of the agreement, and ordered that $630 be refunded to the young woman.

Wedding reception

A couple was married in Sydney and held their wedding reception at a 5-star function centre.  On the evening of their wedding, a severe thunderstorm struck causing extensive blackouts and storm damage across several areas of Sydney.  As a result of the blackout the function centre lost all power.  It was two hours before the function centre was able to obtain a generator to provide power for the music and limited lightning.  However the mains power was not restored for the remainder of the evening.

The couple lodged an application to the Tribunal seeking a full refund of the $19,000 paid for the reception.  On the hearing day both parties appeared and they were encouraged to attempt conciliation.  However they were unable to reach a settlement and the matter proceeded to hearing.

During the hearing the bride gave detailed evidence of the inconvenience that the bridal party and the guests experienced.  She said that the lack of air-conditioning was unbearable, the drinks were served warm, the lighting from candles was inadequate, and the music they had carefully selected could not be played at the chosen times.  The couple considered that the reception they received was not what they had planned and paid for.

The function centre's manager gave evidence that the thunderstorm was one of the worst experienced in Sydney.  Lightning strikes and gale force winds caused such extensive damage that it was officially declared a ‘natural disaster’.  The manager told the Tribunal Member that they provided the best possible service given the circumstances.  They extended the time for the reception, served complimentary drinks and obtained more bottled drinks from an external source at no cost to the wedding party.  However, without mains power they could not provide air-conditioning.  He also gave evidence of the extremely difficult road and driving conditions delayed the delivery of the backup generator.  The manager stated that the function centre considered it performed its agreement and met its contractual obligations to the best of their ability in very difficult circumstances.

The Tribunal Member carefully considered the evidence of the couple and the function centre.  The Member stated it was extremely unfortunate for all concerned that a severe thunderstorm struck Sydney on the evening of the wedding reception resulting in great inconvenience to the bridal party and their guests.  The Member agreed that this was not the wedding reception the couple had planned causing distress and great disappointment.

The Tribunal Member then considered the couple's claim for a full refund of the cost of the reception.  The Member considered that making such an order would result in the function centre receiving no payment at all for the meals served, the drinks provided, the use of the venue and all the efforts made by the function centre in response to the difficult circumstances of that evening.

The Member stated that although the couple was severely disappointed by the reception, they did not produce sufficient evidence to show that the function centre broke its contract or that they were legally responsible for their disappointment, and that despite the difficult conditions the function centre had provided the wedding reception.  Orders were made dismissing the couple's application for a full refund.

Go to top of page iconTop of page

Introduction agency 

A contract is a legally binding agreement between two or more people. Consumers need to be aware that signing an agreement and payment of money may mean they have signed a contract and are bound by the terms of the contract. If a party breaches a contract, the other party may seek to recover any loss. However, in limited circumstances, such as misrepresentation, a contract can be ended.

A woman lodged an application to the Tribunal seeking a refund of the $790 deposit paid to a relationship consultant. She alleged that the consultant used psychological manipulation and misrepresentation to induce her to sign up to their introduction services.

At the Tribunal hearing, the consumer gave evidence that she was an older woman who had approached the relationships consultant with the hope of being introduced to a suitable partner and potential husband. At the initial meeting with the relationship consultant, the woman gave all her personal details and preferences in her quest to encounter a person with the qualities she sought in a companion. She was initially shown a number of photographs of various men that she declined. She was then promised an introduction to a man named David who sounded wonderful to her. She was told that David was “ready to go” if she signed up immediately.

It was at that moment that the woman agreed to sign up to their 4-month membership program and paid the initial $790 deposit. However, after signing the paperwork, the dating agency revealed that David was actually unavailable as he was too busy with work. The woman stated that she felt deceived and tricked into signing up to their membership program, and now she wanted to cancel her membership.

At the hearing, the relationship consultant told the Tribunal that it was standard practice for them to tell potential clients “about someone great that they could meet” when they joined up to their membership program. The consultant also pointed out that their agreement contract clearly states “non refundable” and that they had done nothing wrong.

The Tribunal Member found that the consultant had made a false statement that David was “ready to go”, and that the false statement was made in the context of inducing the applicant to sign up immediately. Orders were made for the relationship consultant to refund $540 to the woman, being the deposit less an allowance of $250 for services which were provided.

A woman lodged an application to the Tribunal seeking a refund of the $790 deposit paid to a relationship consultant. She alleged that the consultant used psychological manipulation and misrepresentation to induce her to sign up to their introduction services.

At the Tribunal hearing, the consumer gave evidence that she was an older woman who had approached the relationships consultant with the hope of being introduced to a suitable partner and potential husband. At the initial meeting with the relationship consultant, the woman gave all her personal details and preferences in her quest to encounter a person with the qualities she sought in a companion. She was initially shown a number of photographs of various men that she declined. She was then promised an introduction to a man named David who sounded wonderful to her. She was told that David was “ready to go” if she signed up immediately.

It was at that moment that the woman agreed to sign up to their 4-month membership program and paid the initial $790 deposit. However, after signing the paperwork, the dating agency revealed that David was actually unavailable as he was too busy with work. The woman stated that she felt deceived and tricked into signing up to their membership program, and now she wanted to cancel her membership.

At the hearing, the relationship consultant told the Tribunal that it was standard practice for them to tell potential clients “about someone great that they could meet” when they joined up to their membership program. The consultant also pointed out that their agreement contract clearly states “non refundable” and that they had done nothing wrong.

The Tribunal Member found that the consultant had made a false statement that David was “ready to go”, and that the false statement was made in the context of inducing the applicant to sign up immediately. Orders were made for the relationship consultant to refund $540 to the woman, being the deposit less an allowance of $250 for services which were provided.

Go to top of page iconTop of page

Franchise or business licence agreements 

It is unlawful for a business to make false or misleading representations about goods or services when supplying those goods or services. Failure to disclose relevant information, or making false promises and predictions can be misleading or deceptive conduct.

A company offering face to face training seminars about share trading and investment also ran a six-month training and mentoring program. After participants had completed this six-month course, they were offered a limited opportunity to enter into a “business licence agreement” giving them the right to promote and sell the company’s DVD and online “webinars” with an attractive 50% commission package. Several interested participants agreed to this offer. They each signed a 25-year business licence agreement and paid a $10,000 non-refundable deposit before attending an intensive training weekend.

The licensees began selling the company’s products in their allocated regions, but problems soon arose. The company’s database system and merchant facility could not handle the volume of orders or processing of payments. Monthly commission payments were late and were often incorrect, and customers began complaining they had not received their products. As more and more issues arose, including the constant altering of the terms and conditions of their agreements particularly in relation to commission fees and expenditure, the licensees began to question the honesty and integrity of the company and its Director. Soon afterwards the Director sent an email to all licensees advising that their licences had been dissolved.

After seeking legal advice, the licensees found that their ‘business licence agreements’ could be franchise agreements. They then applied to the Tribunal seeking a refund of the licensing fees and other operating costs incurred under their individual agreements.

At the Tribunal hearing, the licensees claimed that the Director engaged in misleading and unconscionable conduct by taking advantage of his role as a mentor and abusing their trust, and using pressure selling techniques on them to enter into an agreement without seeking legal advice. They also alleged that the Director made numerous misrepresentations regarding many aspects of the business model. The company’s Director denied making the alleged promises, and blamed the global financial crisis for the company’s poor performance.

After reserving the decision, the Tribunal Member found that there was a clearly executed contract between the parties, regardless of whether it was a business licence agreement or franchise agreement, which was willingly entered into by the licensees. The Member did not accept that the licensees relied on any precontractual misrepresentations. However, the Member found there were significant misrepresentations in the contract relating to the provision of the database services and back end support.

The Member found that it was the failure of the database system that caused the failure of the business model and the respondent did not provide a proper system to support the contracted was conduct that was misleading and deceptive. Orders were made for any fees and operational costs incurred after the training weekend to be refunded to each licensee.

Go to top of page iconTop of page

IT and Telecommunications 

National consumer law guarantees your rights when you buy goods or services, including rights to repairs, replacements and refunds. These rights exist even if you do not have a warranty.

Home computer

A consumer purchased a home computer network server with a two year warranty.  The server worked as expected for 22 months when it suddenly failed and all data appeared to be lost.  The consumer contacted the trader who replaced the server with a new unit in accordance with the warranty conditions, but they advised that the warranty did not cover the retrieval of lost data.  The consumer then paid another company to retrieve the data from the failed server, and lodged an application with the Tribunal against the trader, for compensation for the cost of the data retrieval.

At the hearing, the consumer argued that he was not made aware of the warranty limitations, and that he believed the server had failed because it was not of ‘merchantable quality’.  The respondent trader gave evidence that electronic components can and do fail from time to time due to various causes such as power surges. 

The Tribunal accepted that the goods were replaced strictly in accordance with the warranty terms, and then considered the implied statutory warranties.  As no technical evidence was provided explaining the failure of the server, or evidence of a design fault, the Tribunal was not convinced that the server was defective at the time of sale.  The consumer’s application was dismissed.

Smartphone

A customer purchased a brand new smartphone and within a year of use he began to experience multiple technical issues with the phone, including screen freezing, antenna problems, having to constantly restart the unit and not being able to access various functions of the phone. He made an appointment with a store technician to have his phone inspected and repaired.

The technician confirmed that the phone was still under manufacturer’s warranty. The technician also advised that the unit had both software and hardware faults and he offered to replace the faulty unit with a refurbished one. The customer was unhappy with this offer and asked that his smartphone be either repaired or replaced with a brand-new unit. The store rejected his request and the customer lodged an application to the Tribunal to resolve the dispute.

At the hearing, the customer described the problems with his smartphone and the steps he had taken to repair the unit, including updating the software, returning the phone to its factory settings, and making the appointment with the technician. The store representative said that the customer had refused to allow them to ‘properly test’ the unit in the store to confirm that it had a hardware fault. The customer replied this was because he was concerned this would result in the loss of all his stored personal information.

The Tribunal Member made orders for the respondent store to undertake a full technical inspection of the customer’s smartphone, and if a manufacturing or hardware fault was detected then the unit was to be replaced with a brand-new smartphone from the store’s normal retail stock.

Go to top of page iconTop of page

Photography 

A woman who was engaged to be married had paid $2,175 for a photographer to provide wedding photographs, DVD recording and a wedding album of both the service and reception.  The wedding took place as planned and the photographs, DVD and wedding album were provided.  However the woman was very disappointed with the quality of the photographs.  She felt there was a limited range of photographs to choose from as many were out of focus, some subjects had their eyes closed.  Particular shots of the wedding party were also not taken as requested.  The woman was also disappointed with the format of the DVD as none of the speeches were recorded.  She complained to the photographer who was able to improve some of the photographs, but overall this was not sufficient to the bride.  She then lodged an application to the Tribunal for a full refund of the amount paid.

At the hearing the photographer did not appear, only the woman.  The woman gave the Tribunal Member evidence of various emails between herself and the photographer as to the agreed photographic services to be provided.  She also brought the wedding album and DVD for the Tribunal Member to view.

The Tribunal Member stated that although she was disappointed with the photographic service, the role of the Tribunal is to determine whether the photographer had legally fulfilled the contract, rather than her expectations.  The Member agreed that the photographs taken exhibited a lack of skill and that the DVD format was not supplied as requested by her.  However, she did receive some photographs of reasonable quality and had received the wedding album as required under the contract.  Having received some benefit, the Member did not consider that the woman was entitled to claim the full amount, and made orders instead for a partial refund of $1,500.

Go to top of page iconTop of page

Removalists 

Under the Consumer Claims Act 1987 there are provisions relating to the supply of goods or services.  In every contract there is an implied warranty that the services will be supplied with due care and skill.

A husband engaged a removalist to move the family’s furniture to their new home located 10 kilometres away.  When he booked the removalist service, the husband asked about their damage policy.  He was told the removalist company's policy was that they guaranteed to repair or compensate any damage caused during transit.

The removalist arrived on the day and loaded the family's furniture on the truck.  However, the truck broke down in transit in the middle of a busy intersection and a second truck had to be called.  The furniture was then transferred to the second truck.  When the truck arrived at the new premises, it was discovered that the leather couch, a marble-top table and a mirror had been badly damaged.

The removalist company then denied any liability for the damage, and the husband then lodged an application to the Tribunal for orders that the removalist company either repair the damaged goods or pay them $12,000 compensation.

At the Tribunal hearing the husband supplied photos of the damaged furniture, and copies of the booking confirmation and other correspondence from the removalist company.  He also supplied quotes for the repair and/or replacement of the damaged goods.  The removalist stated that the damage most likely occurred when the goods were being moved to the second truck given the difficult location.  He then tendered the company's documentation containing a number of exclusion clauses one of which stated they were not liable for any damage in the event that goods are transferred from a broken down truck to a second truck.  A further exclusion clause stated that the company were not liable for any damage caused if the owner is not present at the time the damage occurred.

The Tribunal Member considered the evidence of both parties and found that the removalist had failed to exercise due care in the removal and carriage of the family's goods and as a result certain items were damaged.  Orders were made for the removalist to pay $6,000 compensation for the damaged goods.

Go to top of page iconTop of page

Travel and tourism 

Hotel accommodation

A couple brought an application to the Tribunal seeking $300 compensation for a $400 overnight stay in a Sydney hotel.  They alleged that they were unable to use a number of the hotel’s advertised amenities during their stay.

During the Tribunal hearing, the couple claimed that the hotel had breached the implied terms of the contract by not providing easy access to the hotel’s car park or swimming pool, and that a number of facilities in their hotel room were either missing or faulty.  The hotel operator did not deny the problems, but argued that there were mitigating circumstances which were beyond their control.

The Tribunal accepted the couple’s evidence that it was an implied term of the agreement between the parties that the couple should have had access to the amenities advertised on the hotel’s website. The Tribunal member was satisfied that these facilities should have been available in a hotel charging $400 per night, and that the hotel had breached the terms of the agreement.  Orders were made for a partial refund to the couple.

Bus trip to the snow

Under the Australian Consumer Law (ACL), consumers are guaranteed that services provided are rendered with due skill and care, and that the services will be fit for purpose providing that it is reasonable in the circumstances for the consumer to rely on the skill and expertise of the supplier.

A community group purchased a one day trip to the snow with a bus tour company. They planned to depart Sydney just before midnight, sleep overnight on the bus, arrive at the snow in the morning, ski all day and then travel back to Sydney - all within 24 hours.

On the day of the tour, the bus was late picking up the participants and the driver was unfamiliar with the route. The bus also appeared to have mechanical problems as it often drove slowly and had to stop for repairs. In addition, the air-conditioning was not working, making the bus interior uncomfortably cold.

The bus arrived at the snowfields three hours late. Because of the delays, the participants missed out on ski equipment hire and the pre-arranged skiing lesson. They had no choice but to sit in a lounge area and wait for the return bus trip.

The return trip to Sydney was no less eventful. The tour company decided to take a lengthy detour to assist another of the company’s buses that had broken down, despite objections from the tour participants. The group arrived back in Sydney five hours late, causing inconvenience to the participants and their families waiting to pick them up.

An application was lodged to the Tribunal seeking a refund of the tour costs and compensation for “distress and physical discomfort”. At the hearing of the matter, the Tribunal found that the tour was so poorly organised and performed, that the participants were completely denied the purpose of their trip, and in addition they suffered major hardship and discomfort.

The Tribunal noted that compensation could not be awarded for distress under the provisions of the Civil Liability Act 2002. However, as the participants clearly did not get what they paid for, the Tribunal made orders for the full refund of the cost of the tour.

Go to top of page iconTop of page

2014-05-20
Email link to this pagePrint this pageReduce font sizeIncrease font size