VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL
civil DIVISION
CIVIL CLAIMS LIST		VCAT REFERENCE NO. C36/2022
CATCHWORDS	
Contract to build and sell mobile-home caravan — non-compliance with statutory guarantees — purchasers reject the caravan eight months after making delivery — chassis became bent because of loading of components that were fitted under the contract — whether a major failure — whether the seller had any right to attempt to repair — purchasers entitled to a refund of the price paid — Australian Consumer Law (Victoria) ss 54, 55, 269, 260, 261, 262, 263 	

FIRST APPLICANT	Marianne Da Silva	
SECOND APPLICANT	Paulo Da Silva	
RESPONDENT	Crusader Caravans RV Melbourne Pty Ltd ACN: 163 548 383	
WHERE HELD	Melbourne	
BEFORE	A Vassie, Senior Member	
HEARING TYPE	Hearing	
DATE OF HEARING	2 November 2023	
DATE OF ORDER & REASONS	6 December 2023	
CITATION	Da Silva v Crusader Caravans RV Melbourne Pty Ltd (Civil Claims) [2023] VCAT 1355	

Order
The respondent must pay the applicants $90,480.00.

A Vassie
Senior Member			

APPEARANCES:		
For Applicants	In person	
For Respondent	Ms P Barker of Counsel	

Reasons
A dispute about a caravan
1	The applicants Marianne Da Silva and Paulo Da Silva have brought this proceeding for recovery of the purchase price, $90,480.00, that they had paid to the respondent Crusader Caravans RV Melbourne Pty Ltd (‘Crusader’) for a mobile-home caravan. Under a contract dated 30 June 2017 Crusader agreed to build for the applicants a Crusader Excalibur Kingsman caravan, to be built in accordance with standard specifications and fitted with some agreed extras, for that price of $90,480.00. The applicants took delivery of the built caravan in November 2017.
2	The applicants allege that the caravan has a major defect, a bent chassis, which means that there was a major failure to comply with guarantees provided for under the Australian Consumer Law (Victoria), that they were entitled to reject the caravan, and that they did reject it.
3	Agreed extras, which were listed in a quotation that Crusader had given to the applicants before they signed the contract, included two water tanks, a third tank for grey water, and three deep cycle batteries. Another agreed extra, not included in the quotation, was a second spare wheel and tyre, fitted to the rear of the caravan.
4	The main issues in the proceeding have been whether there has been a major failure to comply with guarantees, whether the applicants’ claim should be dismissed because they did not permit Crusader to attempt to repair the defects in the caravan, and whether the applicants were entitled to reject the caravan and did reject it.
5	I am deciding all of those issues in favour of the applicants, and am making the order that they seek for payment to them of $90,480.00.
The hearing
6	At the hearing of the proceeding on 2 November 2023 both of the applicants gave evidence. Sergio Valentino, a director of Crusader, gave evidence by telephone. 
7	The person at Crusader with whom the applicants dealt with before they signed the contract and after they had taken delivery of the caravan was Michael Valentino, another director of Crusader. Sergio Valentino told me that he does not play any active part in the management of Crusader and leaves that to Michael Valentino.
8	The applicants had filed and served Points of Claim, undated but consisting of 44 numbered paragraphs, and numerous documents. The documents included emails between the parties and copies of reports which Crusader had obtained from assessors and an engineer after they had inspected the caravan. An unusual feature of the proceeding is that the applicants are relying upon reports that Crusader itself commissioned and obtained.
9	Each of the applicants in their evidence verified those parts of the Points of Claim that they were able to verify. Because Michael Valentino did not give evidence, the applicants’ evidence about their dealings with him and with Crusader was not contradicted. I accept it all. 
10	Unless I say otherwise, all of the facts set out below come from that evidence and represent my findings of fact. 
Before delivery
11	Paulo Da Silva, who retired in 2020, was still working as a crane driver in 2017. The applicants planned to sell their home and buy a mobile-home caravan in which they could live once Mr Da Silva retired. They approached Crusader and spoke with Michael Valentino. They told him that they were wanting a mobile-home caravan in which they could live and for travelling “off grid”. Michael Valentino told them that an Excalibur Kingsman caravan was the best one that Crusader could build and was at the top of the range of Crusader caravans. By an email dated 4 June 2016 Michael Valentino told them that its “simplistic slab chassis design is a cut above anything on the market” and that the van would be “an ‘X-country or Off-Road Caravan’ capable of Off-Road terrain” and would have “a stronger and more resilient chassis”.
12	On the same day as the signing of the contract, 30 June 2017, Michael Valentino told the applicants by email that he “cannot wait to start building your new home”.
13	As that evidence shows, the applicants disclosed to Crusader their purpose in wanting a caravan — to live in as a mobile home, and for cross-country travel — and Crusader represented to them that the caravan proposed to be built would be reasonably fit for those purposes. 
First trip
14	In the first half of 2018 the applicants travelled to Queensland, towing the caravan. Within a week from the start of the trip they were experiencing problems with fittings in the caravan. Drawers and cupboards would not close properly, screws and fittings were coming loose in the kitchen and dinette. 
15	The applicants reported those problems to Crusader and, on their return to Melbourne, permitted Crusader to inspect the caravan. After the inspection they received no report other than being told that the caravan was then “good to go”.
16	Until Mr Da Silva’s retirement in 2020 they did not use the caravan again. It sat in a yard until their house was sold. 
Full-time travel begins
17	Once the sale of their home had been completed in October 2020 the applicants began to drive around the country and to live in the caravan. After six months’ travel they reached Perth.
18	Throughout the period of travel they experienced sagging of the caravan and the moving of fittings within it, in the ensuite and laundry part. The shower did not drain properly. Mr Da Silva had to push and tilt the caravan so that the water from the shower drained away. They tried to minimise the sagging by leaving the water tanks empty. 
19	In April 2021, while staying in Perth, the applicants contacted Crusader and reported their problems with the caravan. They remained in Perth from late April 2021 until August 2021 while communicating with Crusader. Eventually Crusader arranged to have the caravan inspected and assessed by an engineer. 
Expert inspection and assessment
20	For the purpose of the expert inspection and assessment of the caravan, the applicants took it to North Perth Caravan Repairs. There a firm of insurance assessors, Prime Assessing, arranged for an inspection by Cascade Forensic Engineering. 
21	Following his inspection, Daniel Simms of Cascade Forensic Engineering prepared a report dated 8 June 2021. It recorded that he was registered in the National Engineering Register in the practice of mechanical engineering. He took photographs which accompanied the report. In the report he stated that “substantial vertical flexure of the chassis rails is likely occurring as a result of normal loading, and that continuous movement has caused separation of the chassis subframe from the caravan floor and cladding”. He concluded the report with the following:
It is my opinion that the Chassis has bowed due to excessive vertical loading caused by OEM components including, but not limited to, the batteries, dual water tanks, appliances and in particular the rear cantilever dual spare wheel and tyre carrier, offset substantially from the rear of the Caravan.
The extent of deflection is consistent with the preliminary structural analysis referred to above, with evidence that the awning attachment and upper trim indicating that the deflection commences rearward of the rear axles, with slightly increased defection at the rear-left, likely due to the door penetration and the reduction in contribution from the side panels as a result.
…
It is my opinion that the deflection of the chassis has occurred over time due to insufficient chassis stiffness to sustain applied loading, largely due to the rear spare tyre sub-frame and water tank location.
The layout of the Caravan does not suggest that excessive internal loading in the rear compartment has occurred, but rather that the storage of water tanks, batteries and in particular the rear spare wheels and tyres, carried at a significant offset distance from the rear axles, has resulted in excessive deflection of the main chassis rails, which in turn has resulted in the separation of the floor and caravan subframe.
Whilst the chassis rails are not overstressed, it is my opinion that the stiffness of the chassis is insufficient for the applied load, which has resulted in sagging at the rear of the Caravan.
No one was able to tell me what the acronym “OEM” stands for, but “OEM components” were those which were either parts of the caravan’s design or agreed extras, so the “applied load” was one that Crusader knew, or ought to have known, was going to be upon the chassis of the caravan built for the applicants.
22	Crusader, upon receiving that report, suggested to the applicants that the chassis could be repaired by cutting it to release the bend or bends in the chassis and then welding it. The report of Mr Simms did not say whether the chassis could be repaired in that way or at all. Mr Da Silva was unhappy with the suggestion because such a repair would mean that the chassis was no longer galvanised. 
23	Mr Da Silva’s evidence was that Craig Davies of Prime Assessing had told him that the caravan should be written off instead of being transported back to Melbourne. As I have been told nothing about what qualifications or expertise Mr Davies had to express such an opinion, I do not attribute any weight to it. It does, however, explain the applicants’ next step.
Rejection
24	On 26 July 2021 the applicants sent to Crusader an email, one paragraph of which was:
We mentioned that we have a number of reasons for not wanting to accept Crusader’s proposed repair yet you didn't even bother to ask us what those reasons were Michael. We do not accept the repair John has proposed because it would mean the chassis would no longer be galvanised to protect against rust. It would also add extra weight diminishing our payload, which we do not accept. It may also affect any future resale. The suggested remedy in fact would not actually “repair” the chassis. It would not straighten the chassis and may possibly cause another weak point. Any of these reasons mean that the caravan would not be fit for purpose. In fact, according to the engineer’s report it was not even fit for purpose when you sold it to us, especially in regard to durability. Paul has spoken again to ACCC and while we understand that companies have a right to remedy, they can only insist on a repair when it is a minor issue. We don’t think anyone would call a damaged chassis a minor issue. We have been advised that under Section 54 of the Australia Consumer Law (ACT) when dealing with a major issue we have a right of refusal to repair. We exercise that right and again requires replacement or full refund.
I have not been told who “John” was. The reference to “ACCC” is presumably to the Consumer Affairs department either of Western Australia or of Victoria. 
25	In an earlier paragraph the applicants had said that they would give Crusader (Michael Valentino) the rest of the week to consider its position, and began a final paragraph: “Michael, please do not reply today. Take some time and let’s see where we’re all at on Monday”. 
26	Despite what the applicants said in the email about giving Crusader time, and even though the email did not use the word “reject”, I consider that the meaning that the last two sentences quoted above conveyed, and Crusader ought to have understood it to be, that the applicants were rejecting the caravan because of a major failure to comply with a statutory guarantee and were demanding a refund of the price they had paid for the caravan. At the same time, the applicants were saying that they were open to negotiation as to a basis on which they might accept the caravan again, despite the rejection.
27	There were negotiations but they did not produce any agreement. The applicants returned to Melbourne with the caravan.
28	After the applicants began this proceeding Crusader asked for another opportunity to inspect the caravan. Their response was that it could be inspected at their place of residence or at Crusader’s premises if Mr Da Silva was allowed to be present at the inspection. That is where matters were left. There has been no evidence that the defects identified by Mr Simms in his report are capable of satisfactory repair.
Australian Consumer Law (Victoria)
29	All section references below are to sections of the Australian Consumer Law (Victoria).
30	“Consumer” is defined in section 3, which provides that a person is taken to have acquired particular goods as a “consumer” if (amongst other things) the goods were of a kind ordinarily acquired for personal domestic or household use or consumption (section 3(1)(b)). Mobile-home caravans are goods of such a kind. So the applicants are consumers of the caravan in the relevant sense. Crusader has not suggested otherwise. 
(a)  Statutory guarantees
31	Only the first three subsections of section 54 are presently relevant. They provide:
54 	Guarantee as to acceptable quality
(1)  	If:
(a)  	a person supplies, in trade or commerce, goods to a consumer; and
(b)  	the supply does not occur by way of sale by auction;
there is a guarantee that the goods are of acceptable quality.
(2)  	Goods are of acceptable quality if they are as:
(a)  	fit for all the purposes for which goods of that kind are commonly supplied; and
(b)  	acceptable in appearance and finish; and
(c)  	free from defects; and
(d)  	safe; and
(e)  	durable;
as a reasonable consumer fully acquainted with the state and condition of the goods (including any hidden defects of the goods), would regard as acceptable having regard to the matters in subsection (3).
(3)  	The matters for the purposes of subsection (2) are:
(a)  	the nature of the goods; and
(b)  	the price of the goods (if relevant); and
(c)  	any statements made about the goods on any packaging or label on the goods; and
(d)  	any representation made about the goods by the supplier or manufacturer of the goods; and
(e)  	any other relevant circumstances relating to the supply of the goods.
32	A relevant matter for the purposes of section 54 is the nature of the goods: a caravan designed to be a mobile home. Another relevant matter is the representation that Michael Valentino, on behalf of the supplier Crusader, made about the caravan: it would be at the top of the range of Crusader caravans and its chassis design would be “a cut above everything on the market”. 
33	Section 55 provides:
55   	Guarantee as to fitness for any disclosed purpose etc.
(1)  If:
(a)  	a person (the supplier ) supplies, in trade or commerce, goods to a consumer; and
(b)  	the supply does not occur by way of sale by auction;
there is a guarantee that the goods are reasonably fit for any disclosed purpose, and for any purpose for which the supplier represents that they are reasonably fit.
(2)  	A disclosed purpose is a particular purpose (whether or not that purpose is a purpose for which the goods are commonly supplied) for which the goods are being acquired by the consumer and that:
(a)  	the consumer makes known, expressly or by implication, to:
(i)  	the supplier; or
(ii)  	a person by whom any prior negotiations or arrangements in relation to the acquisition of the goods were conducted or made; or
(b)  	the consumer makes known to the manufacturer of the goods either directly or through the supplier or the person referred to in paragraph (a)(ii).
(3)  	This section does not apply if the circumstances show that the consumer did not rely on, or that it was unreasonable for the consumer to rely on, the skill or judgment of the supplier, the person referred to in subsection (2)(a)(ii) or the manufacturer, as the case may be.
34	Crusader did not comply with either of those guarantees. The applicants had disclosed to it the particular purpose for which they were acquiring a caravan, namely, as a mobile home for them while they travelled cross-country, “off grid”, and Crusader represented to them that it would be reasonably fit for that purpose. Moreover that was a purpose for which a caravan is commonly supplied. Because of the bent chassis and the associated shifting of fittings as the caravan sagged and the difficulty of getting water from the shower to drain properly, the caravan was not reasonably fit for the purpose, was not free from defects, and a reasonable consumer would not regard the quality of the caravan as acceptable.
35	What remedies were available to the applicants as a result of the failure to comply with the guarantees depended upon the extent of the failure. 
(b)  A major failure?
36	Section 259(1)(b), to which I return below, enables a consumer to take action against a supplier when the supplier has not complied with the statutory guarantees. Section 260, so far as it presently relevant, provides:
260   When a failure to comply with a guarantee is a major failure
(1)  	A failure to comply with a guarantee referred to in section 259(1)(b) that applies to a supply of goods is a major failure if:
(a)  	the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or
(b)  	the goods depart in one or more significant respects:
(i)  	if they were supplied by description—from that description; or
(ii)  	if they were supplied by reference to a sample or demonstration model—from that sample or demonstration model; or
(c)  	the goods are substantially unfit for a purpose for which goods of the same kind are commonly supplied and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or
(d)  	the goods are unfit for a disclosed purpose that was made known to:
(i)  	the supplier of the goods; or
(ii)  	a person by whom any prior negotiations or arrangements in relation to the acquisition of the goods were conducted or made;
and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or …
37	For reasons given in paragraph 34 above the caravan was substantially unfit for the purposes which the applicants had made known to the Crusader and for which a mobile-home caravan was commonly supplied. A reasonable consumer would not have acquired the caravan if the consumer was fully acquainted with a chassis that bent because it would not sustain the load put upon it by fittings that were the subject matter of the contract to sell the caravan.
38	There was no evidence that the defects in the caravan could be remedied easily, or within a reasonable time, or at all. The engineer Mr Simms did not say that they could be. Someone on Crusader’s behalf proposed a remedy that would involve cutting and welding the chassis. There was no evidence that the proposed remedy was likely to be effective.
39	The applicants have established that the failure to comply with the statutory guarantee was a major failure. 
(c)  Defences
40	Section 259(2)(a) provides that if the failure to comply with a statutory guarantee can be remedied and is not a major failure, the consumer may require the supplier to remedy the failure within a reasonable time.
41	The principal defence that Crusader put forward during the hearing was that the applicants were obliged to allow Crusader to attempt to repair the caravan but had not done so. Sergio Valentino said in his evidence that Crusader was ready and willing to repair the caravan if it could, and that if it tried but failed he would accept that there had been a major failure as described in the Australian Consumer Law (Victoria). 
42	Section 261 provides:
261   	How suppliers may remedy a failure to comply with a guarantee
If, under section 259(2)(a), a consumer requires a supplier of goods to remedy a failure to comply with a guarantee referred to in section 259(1)(b), the supplier may comply with the requirement:
(a)  	if the failure relates to title—by curing any defect in title; or
(b) 	if the failure does not relate to title—by repairing the goods; or
(c)  	by replacing the goods with goods of an identical type; or
(d)  	by refunding:
(i)  	any money paid by the consumer for the goods; and
(ii)  	an amount that is equal to the value of any other consideration provided by the consumer for the goods.
While the section refers to a compliance by repairing goods, the section operates only when, under section 259(2)(a), the consumer has required the supplier to remedy the failure within a reasonable time. The applicants have not required Crusader to repair the caravan. On the contrary, they say that there has been a major failure and that the caravan is beyond repair.
43	The defence reflects a misconception that a supplier of goods that turn out to be defective has a right to attempt to rectify the defects and that the consumer has no claim against the supplier until the consumer has allowed the supplier to exercise that right. If there has been a major failure to comply with a statutory guarantee, it may be open to the consumer to reject the goods, in which case no question of repairing the goods arises. If the failure is not a major failure but the consumer does not require the supplier to repair the goods and instead claims compensation for the failure, the consequence might be that the compensation is reduced because the consumer has not attempted to mitigate the loss by requiring the supplier to remedy the failure, but that is all. 
44	Another arguable defence is that the applicants had lost the right to reject the caravan even if there had been a major failure to comply with guarantees.
45	Section 259 provides for how a consumer may take action under the section if one of the statutory guarantees has not been complied with. Subsection (3) provides that if the failure to comply with the guarantee cannot be remedied or is a major failure the consumer may, “subject to section 262”, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection.
46	So far as is presently relevant, section 262 provides:
262	When consumers are not entitled to reject goods
(1)  	A consumer is not entitled, under section 259, to notify a supplier of goods that the consumer rejects the goods if:
(a)  	the rejection period for the goods has ended; …
(2)  	The rejection period for goods is the period from the time of the supply of the goods to the consumer within which it would be reasonable to expect the relevant failure to comply with a guarantee referred to in section 259(1)(b) to become apparent having regard to:
(a)  	the type of goods; and
(b)  	the use to which a consumer is likely to put them; and
(c)  	the length of time for which it is reasonable for them to be used; and
(d)  	the amount of use to which it is reasonable for them to be put before such a failure becomes apparent.
47	I have found that the applicants notified Crusader by email on 26 July 2021 that they rejected the caravan and expressed grounds for the rejection that derived from the engineer’s report dated 8 June 2021. There was no evidence of how and when they first saw that report. By the time that they notified Crusader of the rejection they had had possession of the caravan for eight months and had used it to live in on interstate trips. Although during those eight months they became aware that the caravan had defects they did not become aware of the cause of those defects until they saw the report. I consider that the rejection period had not ended before they notified Crusader of the rejection.
(d)  Outcome
48	Once the applicants notified Crusader that they had rejected the caravan, section 263 operated. Section 263(4) provides that the supplier “must, in accordance with an election made by the consumer”, refund any money paid by the consumer for the goods, or replace the goods with goods of the same type or value.
49	The email sent on 26 July 2021 was equivocal. The part of the email that is set out in paragraph 24 above ended with the words “request replacement or full refund”. There has been no evidence of any willingness on Crusader’s part, before the commencement of this proceeding or at all, to replace the caravan with one of the same type and value. If the email of 26 July 2021 was not an election to claim a refund of the purchase price for the caravan, in my view the commencement of this proceeding, in which the applicants claimed $90,480.00, the amount they had paid for the caravan, constituted an election to claim a refund. So that is the amount that, in accordance with section 263(4), Crusader must pay.
50	It may seem odd that the applicants are entitled to a full refund without any allowance for depreciation over what is now six years from the time that they took delivery of it, but that is the outcome that the legislation appears to dictate. There will be an order that Crusader must pay to the applicants $90,480.00. 

A Vassie
Senior Member