Home » The case of the black opals and the latent defects

The case of the black opals and the latent defects

Posted by Marcus McCarthy | 12 December 2016 | Corporate & Commercial

A woman walks into an antique jewellery store and buys a pair of bracelet cuffs, only to find out nine years later on the BBC series Antiques Roadshow that the bracelet cuffs were not all that they were made out to be.

This is the scenario that happened in case of Upton v Martin & Stein Antiques Pty Ltd [2016] NSWCATAP 228, a recent decision in the New South Wales Civil and Administrative Tribunal.

The key issue raised in the appeal in the Tribunal was whether the Applicant’s cause of action arose at the time of the purchase in 2006 (in which case it would beyond the limitation period for bringing such an action), or at the time she discovered the latent problem (defect) in 2015.

Brief facts of the case

In 2006, the Applicant purchased two bracelet cuffs for $7,000 from the Respondent, Martin & Stein Antiques Pty Ltd, a jewellery store in the Sydney CBD. The Applicant believed the cuffs to be estate jewellery and, importantly, she was informed by the sales assistant that the stones in the cuffs were solid black opals. The Applicant returned to the UK.

Nine years later in 2015, the Applicant visited Walmer Castle in England for her birthday where the popular show Antiques Roadshow was providing expert valuation services. The Applicant had her bracelet cuffs examined by Antiques Roadshow’s Joanna Hardy, a jewellery specialist, and was informed that the cuffs were set with doublets and not solid black opals. The cuffs were valued as worth considerably less than the purchase price of $7,000.

Following, in July to August 2015, the Applicant contacted the Respondent and received no response. An attempt to communicate through NSW Fair Trading revealed that the Respondent did not have records dating back to 2006 and that the store had consumer guarantees for overseas customers which expired 30 days after the purchase.

Engaging an expert

Despite the response, in September 2015 the Applicant paid for an expert gemstone report which concluded (by removal of the stones on the bracelet cuff) that the bracelet contained opal doublets and not black opals.

New South Wales Civil and Administrative Tribunal

On 23 October 2015, the Applicant lodged an application in the Tribunal seeking damages for specific performance (i.e in this case for an exchange of the bracelet cuff to a black opal bracelet cuff), breach of contract, misrepresentation and deceit and additionally, she made statements referring to false and misleading statements by the Respondent.

It is important to note that the Applicant did not wish to rescind the contract or seek a refund, and that the provisions in the Commonwealth Australian Consumer Law (ACL) did not commence until 1 January 2011 [which replaced its predecessor of relevant State and Territory consumer protection legislation in fair trading acts and the Trade Practices Act 1974 (Cth)].

Original decision and other applications

On 4 November 2015, the Tribunal determined that it had no jurisdiction to determine the claim as the Applicant was time barred based on s79L(1)(a) of the FTA that the claim was brought outside the three year period as, under that section:

 “(1)   The Tribunal does not have jurisdiction to hear and determine a consumer claim if any of the following apply:

(a)   the cause of action giving rise to the claim first accrued more than 3 years before the date on which the claim is lodged, [emphasis added]

(b)     the goods or services to which the claim relates were supplied (or, if made in instalments, were last supplied) to the claimant more than 10 years before the date on which the claim is lodged.

(2)     Nothing in this section affects any period of limitation under the Limitation Act 1969.”

The Tribunal was of the view that the Applicant’s cause of action arose on the day of the purchase in 2006 and applying s79L(1)(a), the limitation period applied.

The Applicant, unsatisfied with the findings then proceeded to lodge two further applications.  The first, to set aside the original decision and, the second, to commence fresh proceedings which formed the basis of the appeal.

The Tribunal made orders to combine all the applications to be heard in the recent appeal.

Successful on appeal

On 17 October 2016, the Applicant was ultimately successful in appealing the Tribunal’s original decision.

While the Appeal panel agreed with the original decision that for the cause of action in breach of contract, the Tribunal had no jurisdiction to determine the claim with the strict application of s79L(1)(a).

In relation to the causes of action for misleading and deceptive conduct and false representation, where a defective or inferior quality of goods purchased is latent (that being not discovered), the cause of action does not accrue until the defect or latent aspect is discovered.

Reason for decision

The Tribunal referred to s68 of the FTA (at the time of the purchase of the cuffs) which provided:

68 Actions for damages

  • A person who suffers loss or damage by conduct of another person that is in contravention of a provision of Part 3,4,5 (section 43 excepted), 5A, 5B, 5C or 5D may recover the amount of the loss or damage by action against the other person or against any person involved in the contravention.
  • An action under subsection (1) may be commenced at any time within 6 years after the day on which the cause of action that relates to the conduct accrued. [emphasis added]

 In this case, the cause of action did not begin until 2015, when the Applicant received the expert report from the gemmologist to confirm that the bracelet cuff stones were opal doublets and not black opals as first thought.

This interpretation is consistent with other courts in Australia that have found that such a cause of action arises when the party becomes aware of the misrepresentation.[1]

The Tribunal in its original decision had made an error in not considering the Applicant’s claims in for misleading and deceptive conduct and false representation under sections 42, 44(a) and 68 of the FTA and in tort for negligent and fraudulent misrepresentation.

In reaching this conclusion, the Appeal panel referred to the cases of causes of action for misleading and deceptive conduct, referring to comments by Bergin J in McBride v Christies Australia [2014] NSWSC 1729 where in that case, the plaintiff purchased a painting believed to be created by a famous painter, Albert Tucker. The plaintiff in that cause was successful in their claim for misleading and deceptive conduct some 10 years after the painting was acquired.

[1] Bergin J in McBride v Christies Australia [2014] NSWSC 1729; see also Wardley v The State of Western Australia (1992) 175 CLR 514 at page 539; Sutherland Shire Council v Heyman [1985] HCA 41; (1985) 157 CLR at 424.

 

This publication is © Nexus Law Group and is for general guidance only. Legal advice should be sought before taking action in relation to any specific issues.

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