Thanks again for the input.
You are correct that I could have done some study rather than post on here or read what others have had to say. However I thought the reason for PPRuNe was for pilots or pilots to be to keep in the loop and maybe even help each other out (maybe helping others is just something that generation Y is into). I guess since life has been so easy for generation Y they don't feel the need to stomp on others to get to where they want to go. I'm not actually part of that generation but it seems the older generation here just wants to bag people, tell them how hard it was in their day and expect you to make life as hard for yourself as it was for them?!
Any way if this thread helps one person to get that answer right that may have gotten it wrong without reading it then it was worth while. I'm all for helping others in their career and one of those steps would be the CPL and ATPL exams.
Just to note on my particular case and how it's going. CASA have now said that I was CORRECT in my interpretation. However in the future you will still be expected to give the answer they deemed to be correct in the first place, so let the dog sit in the plane in the exam but don't do it in real life or you'll cop the 25 penalty units!