Appliance and Airconditioning Services Pty Ltd v ACM Liverpool Pty Ltd t/a Liverpool Nissan

[2017] NSWCATCD 55

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Appliance & Airconditioning Services Pty Ltd v ACM Liverpool Pty Ltd t/a Liverpool Nissan [2017] NSWCATCD 55

Hearing dates:

17 July 2017

Decision date:

04 August 2017

Jurisdiction:

Consumer and Commercial Division

Before:

P French, General Member

Decision:

1. The application is dismissed on the basis that the Tribunal does not have jurisdiction to deal with it.

Catchwords:

MOTOR VEHICLES – application for an order requiring the Respondent to replace the Applicant’s motor vehicle or permitting the Applicant to return it and obtain a refund of its purchase price – where the date of purchase of the motor vehicle was 23 February 2010

 

CONTRACT - where the Applicant has failed to establish a cause of action – where the action has not been commenced within the time period permitted by section 79L of the Fair Trading Act 1989 as it is now in force - where the contractual obligations between the parties have ended

FAILURE TO COMPLY WITH STATUTORY CONDITIONS - where the implied condition as to supply by description contained in section 40P and the implied undertaking as to quality and fitness contained in section 40Q of the Fair Trading Act 1989 as it is was in force on 23 February 2010 do apply in this case – where the Applicant has failed to commence an action within the time period permitted by section 40ZB of the Fair Trading Act 1989 as it was in force on 23 February 2010 - where the motor vehicle is not substantially used for private purposes – where the total relevant value of the claim exceeds the prescribed limit on the Tribunal’s order making power imposed by section 79S of the Fair Trading Act 1989 as it is now in force – where GST was a component of the purchase price of the motor vehicle – where it is not relevant that the Applicant is a business entitled to claim a GST input tax credit

Legislation Cited:

A New Tax System (Goods and Services Tax) Act 1999
Australian Consumer Law (NSW)
Consumer Claims Act 1998
Fair Trading Act 1989
Motor Vehicles Taxation Act 1988

Cases Cited:

Bunnings Group Limited (formerly Bunnings Pty Ltd) v Laminex Group Limited [2006] FCA 682
Sacks v Hammoud [2016] NSWCATAP 225
Safi v Heartland Motors Pty Ltd t/as Heartland Chrysler [2016] NSWCATAP 80
Temple & Fisher v Mazda Australia Pty Ltd & AMR Motors Pty Ltd [2017] NSWCATCD 17
Upton v Martin & Stein Antiques Pty Ltd [2016] NSWCATAP 228
Wardley Australia Ltd v Western Australia (1992) 175 CLR 514

Category:

Principal judgment

Parties:

Appliance & Airconditioning Services Pty Ltd (Applicant)
ACM Liverpool Pty Ltd t/a Liverpool Nissan (Respondent)

Representation:

Mr Praveen Chandra, Managing Director, for Applicant
Mr Darrell Hough, Service Manager, for Respondent

File Number(s):

MV 17/00519

Publication restriction:

Nil

reasons for decision

1. This is an application by Appliance & Airconditioning Services Pty Ltd (the Applicant) for an order from the Tribunal under subsection 79N(g) or (h) of the Fair Trading Act 1979 (NSW) (FT Act) that would require ACM Liverpool Pty Ltd t/a Liverpool Nissan (the Respondent) to either replace a 2009 Model Nissan Navarra (motor vehicle) it purchased on 23 February 2010, or alternatively, that would entitle it to return that motor vehicle to the Respondent and obtain a full refund of its purchase price. This application was made to the Tribunal on 5 January 2017 (the application).

2. For reasons that are set out following, the Tribunal has concluded that it does not have jurisdiction to deal with the Application. The Applicant’s claim in contract was not brought within the three year limitation period imposed by section 79L of the FT Act as it is now in force or within the period where contractual obligations subsisted between the parties. The Applicant is not entitled to rely upon the implied condition as to supply by description contained in section 46P or the undertaking as to quality and fitness contained in section 40Q of the FT Act as it was in force on 23 February 2010 (the date of supply of the motor vehicle) because those claims have not been made within the time period permitted by section 40ZB of the FT Act as it was in force on 23 February 2010. Additionally, the motor vehicle was not supplied for private purposes. It therefore does not fall within the new motor vehicle exception to the $40,000.00 monetary limit imposed on the Tribunal’s jurisdiction by section 79S of the FT Act. The Application has therefore been dismissed.

Procedural history

3. The application first came before the Tribunal, differently constituted, in a Group List for conciliation and hearing on 3 February 2017. The Applicant’s Managing Director, Mr Praveen Chandra, attended that hearing on its behalf. The Respondent’s Service Manager, Mr Darrell Hough, attended the hearing on its behalf. In accordance with the Tribunal’s usual practice when both parties are present, prior to the case being called, the parties were provided with an opportunity to attempt to resolve the dispute in conciliation with the assistance of a Tribunal conciliator. Those efforts were not successful.

4. When the matter returned to the hearing room, it appears that the Tribunal identified as a preliminary issue the Tribunal’s jurisdiction to deal with the Application. It set the matter down for a directions hearing on this preliminary issue and gave directions to the parties for the filing and service of submissions on the issue of jurisdiction. Both parties complied with those directions.

5. The matter was next listed before the Tribunal, differently constituted, on 22 March 2017. At that hearing, the Tribunal (apparently) declined to deal with the question of jurisdiction as a preliminary issue. It adjourned the matter for a special fixture hearing and gave directions to the parties for the filing and service of evidence on the merits of the Application. Both parties have complied with those directions.

Evidence and submissions before the Tribunal

6. The evidence and submissions before the Tribunal comprise the material filed by both parties in relation to the issue of jurisdiction and in relation to the substantial merits of the Applicant’s claim.

7. Mr Chandra, Managing Director of the Applicant, gave oral evidence under oath. Mr Darrell Hough, Service Manager of the Respondent, gave oral evidence under affirmation.

8. The evidence of the parties will be referred to where relevant following.

The alleged defects in the motor vehicle

9. The Applicant contends that he is entitled to replacement of the motor vehicle or to return it to the Respondent and obtain a refund of the purchase price he paid for it because it has the following defects:

1. a malfunctioning transmission;

2. a significantly higher fuel consumption than that represented in the Nissan marketing materials for the motor vehicle he relied upon when he purchased it;

3. faulty wheel alignment;

4. rust;

5. the tub liner detaching;

6. a defective radiator;

7. a malfunctioning timing chain; and

8. a defective exhaust gas recirculation system.

Material facts

10. The material facts to emerge from the evidence may be stated as follows:

10.1   The Applicant purchased the motor vehicle which is the subject matter of this dispute from the Respondent on 23 February 2010. The Respondent was the retailer of the motor vehicle, it was not its manufacturer.

10.2   The motor vehicle is a Nissan Navara ute. It is 4 wheel drive, has a 2.5litre engine capacity, automatic transmission, a double cabin (4 doors, front and back seats), and a covered tray.

10.3   The purchase price of the motor vehicle was $43,405.00, which included $3,945.91 in GST. The total amount paid by Applicant to the Respondent at the time of purchase was $46,000.00, which included the costs of registration, stamp duty and compulsory third party insurance.

10.4   The contract for the sale of the motor vehicle incorporated a manufacturer’s warranty which extended to 18 February 2013 or to 100,000kms travelled, whichever came first. On expiry of the manufacturer’s warranty a further retail warranty provided by Respondent, called the Mechanical Protection Plan, activated. This warranty extended from the expiry of the manufacturer’s warranty to 18 February 2016 or to 200,000kms, whichever came first. The application of the Mechanical Protection Plan was conditional upon the motor vehicle being serviced in accordance with the directions given in the owner’s manual and by the Respondent.

10.5   The Applicant is a business registered for the Goods and Services Tax under the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). It is entitled to claim a GST input tax credit for any creditable acquisition it makes (section 11.20 of the GST Act).

10.6   The motor vehicle is registered for business use under the Motor Vehicles Taxation Act 1988 (NSW) (MVT Act).

10.7   The Applicant conducts a business centred on the installation, servicing and repair of air-conditioning units.

10.8   The Applicant purchased the motor vehicle for Mr Chandra’s use in the conduct of its business. It was used for attendance to client appointments and for business administration tasks. It also appears that Mr Chandra used the motor vehicle for private purposes. Mr Chandra says that he used the motor vehicle for business purposes about 20% of the time and for private purposes approximately 80% of the time. There is no log book in evidence that provides an objective account of the extent of business or personal use of the motor vehicle.

10.9   Nissan’s current advertising brochure for the Nissan Navara is in evidence. Neither party suggested to the Tribunal that the contents of this brochure is materially different from the way in which the Nissan Navara range was advertised and described in February 2010 when the motor vehicle which is the subject of these proceedings was purchased. I am satisfied that the contents of the brochure primarily describe the Nissan Navara range as being designed for commercial use, particularly by tradespersons. The brochure does describe the range as also being suitable for personal uses, such as towing a boat or caravan. However, I am satisfied that the Nissan’s marketing materials conceptualise personal use as a secondary or incidental benefit of the motor vehicle. This is encapsulated in the following extract from the current brochure:

A shift has been made. A shift towards a ute that’ll really put in the hard yards. Whether it’s moving big heavy loads or big heavy workmates, the Nissan Navara is ready to do the job. With loads of features to make it just that little bit easier.

A shift has been made when it comes to your down time too. On the weekend, if you get one, you’ll find that the Nissan Navara is just as good at getting your family from A to B. In fact, it’s built so tough, it’ll get you from A to B to Z if you need it to.

10.10    The evidence establishes that Mr Chandra first claimed that there was a malfunction of the motor vehicle’s transmission system on 16 March 2010. It appears that a transmission hose dislodged resulting in all of the oil draining from the transmission. The motor vehicle had to be towed to the nearest Nissan dealership, which was Macarthur Nissan, where the transmission oil was replaced at no cost to the Applicant.

10.11   However, Mr Chandra claims that this incident resulted in permanent damage to the transmission which resulted in it failing to change gears responsively and in over-revving. He contends that he repeatedly contacted the Respondent to request the repair or replacement of the transmission but the Respondent refused or failed to diagnose any malfunction and therefore did not replace or effectively repair it at any time.

10.12   The Respondent has submitted into evidence its history of work performed on the motor vehicle. That record establishes that the motor vehicle was with the Respondent for inspection and/or repair of the transmission on 24 March 2010, 6 April 2010, 13 July 2010, 14 June 2011, 10 October 2011, 21 November 2011, and 26 March 2013. There is then no reference to the transmission in the work log until 1 November 2016, when the Applicant again presented the motor vehicle for repair, claiming that the transmission was malfunctioning. Mr Chandra has submitted into evidence two letters he wrote to the Respondent on behalf of the Applicant, dated 8 April 2011 and 10 February 2013, in which he formally complains about the motor vehicle’s transmission, among other issues.

10.13   Mr Chandra has submitted into evidence an unsigned ‘inspection report’ dated 24 February 2017 by Shalen Singh who appears to be a licenced motor vehicle repairer working for a business trading as NSW Vehicle Inspections. In that report Mr Singh states the following ‘finding:’ “[f]ound harsh erratic transmission shift pattern between lower gears and progressively to higher gears. High engine RPM (exceeding 4000 RPM) was observed.”

10.14   Mr Chandra gave evidence that he first complained to the Respondent that the motor vehicle’s fuel consumption was excessive in March or April 2010, and then on every occasion that the motor vehicle was presented for service or repair thereafter. The Respondent’s work record for the motor vehicle records that a ‘fuel system’ repair was investigated on 13 July 2010, 14 June 2011, 10 October 2010, and 21 November 2011. Mr Chandra’s letters to the Respondent dated 8 April 2011 and 2 February 2013 also formally complain about the motor vehicle’s fuel consumption.

10.15   Mr Chandra contends that Nissan’s marketing materials represent that the motor vehicle should achieve a fuel economy of 10.5litres for each 100kms travelled. However, he contends that the motor vehicle’s actual fuel economy was in the range of 13.83litres to 15litres per 100kms. He arrives at this conclusion by dividing the quantity of fuel purchased by the kms travelled since the last fuel purchase. He does not submit any expert evidence in relation to the motor vehicle’s fuel consumption. However, in his inspection report, Mr Singh states that the faults he diagnosed with the motor vehicle’s transmission system are likely to result in higher fuel consumption.

10.16 Mr Hough says that upon its various investigations of Mr Chandra’s complaints concerning the motor vehicle’s fuel consumption its mechanics concluded that the fuel system was functioning normally and that fuel consumption was within the normal range expected. He submitted that actual fuel consumption depends on a variety of variables including the road conditions, traffic movement, and the weight being carried by the motor vehicle.

10.17   The motor vehicle’s front wheel alignment was checked and adjusted by the Respondent on 14 June 2011 at no cost to the Applicant in the context of a service of the motor vehicle. There is no evidence of any defect in the wheel alignment prior to or after this date. It is not apparent in the evidence on what basis Mr Chandra contends that this work was necessary due to a latent manufacturing defect in the motor vehicle. Mr Hough gave evidence that wheels may come out of alignment due to the impact of potholes in the road or impact with a curb. He contended that the need for the re-alignment did not arise from any manufacturing defect.

10.18   In the course of the service and repair of the motor vehicle conducted on 14 June 2011 the Respondent also replaced the chrome driving light covers which showed rust. This work was performed under the motor vehicle’s manufacturer’s warranty at no cost to the Applicant. There is no evidence of any rust in any other component of the motor vehicle prior to or after this date. Nor is there any evidence of a recurrence of rust in the driving light covers after this repair was carried out.

10.19   In his letter to the Respondent dated 8 April 2011, Mr Chandra complains that the tub liner is coming off and requests that it be repaired. This repair was carried out by the Respondent on either 19 April or 14 June 2011 (it is not clear on the evidence which of those dates it was). There is no evidence of any recurrence of this problem after that date.

10.20   The evidence establishes that a coolant leak from the motor vehicle’s radiator was first detected by the Respondent during an inspection of the motor vehicle carried out on 29 March 2016. The Respondent’s mechanic recommended a repair be carried out which was to be at the Applicant’s expense because the warranties on the motor vehicle had by then expired. Mr Chandra declined to have this repair carried out by the Respondent. He arranged for another motor vehicle repairer to carry out the repair. There is no evidence of any defect in the motor vehicle’s cooling system before or after 29 March 2016. It is not apparent on what basis Mr Chandra contends that the radiator leak arose from a latent manufacturing defect in the motor vehicle that was present at the time of its supply to him.

10.21   Mr Chandra gave evidence that in January 2016 he started to experience difficulties starting the motor vehicle in the mornings and with it stalling. These difficulties resulted in him revving the engine which caused neighbours to complain. On 17 June 2016, Mr Chandra took the motor vehicle to Macarthur Nissan to have this problem inspected. Macarthur Nissan diagnosed a fault in the timing chains and quoted $2,650.00 for the repairs required. Mr Chandra then contacted the Respondent and requested that this repair be carried out without charge. The Respondent insisted that its mechanics have the opportunity to inspect the vehicle before deciding how the matter would be dealt with.

10.22   An inspection of the motor vehicle by the Respondent was eventually booked for 14 September 2016. Mr Chandra did not present the motor vehicle for inspection on that day without notice to the Respondent or any explanation being provided to the Respondent for not doing so. However, Mr Chandra re-booked the motor vehicle for inspection on 1 November 2016 and did present the motor vehicle for inspection on that date. The inspection confirmed that the motor vehicle’s timing chains required replacement. At the time this inspection was conducted, the motor vehicle had 125,970kms on its odometer.

10.23   The Respondent submitted an ‘out of warranty’ request to cover the cost of the repair to the manufacturer of the motor vehicle, Nissan Australia. That request was not approved. However, Nissan Australia did offer to pay 75% of the costs of the parts required for the repair. Mr Chandra rejected that offer.

10.24   In the course of the inspection of the timing chains on 1 November 2016, the Respondent’s mechanic also diagnosed an exhaust gas leak which was caused by a cracked pipe in the engine’s flange area. This crack opened further when this area was dismantled for the inspection of the timing chains. Mr Chandra contends that the Respondent’s mechanic somehow caused the crack in the exhaust recycling pipe when he or she was dismantling the engine to inspect the timing chains. Mr Hough denies this. On behalf of the Respondent he has submitted into evidence photographs of the engine prior to it being dismantled which show dark staining around the exhaust pipe, which he says indicates the presence of an exhaust gas leak. The Respondent has offered to repair the exhaust gas leak for the cost of the part only. Mr Chandra has rejected that offer.

10.25  On 17 February 2017 Mr Chandra obtained a quotation from Macarthur Nissan for the repair of the motor vehicle’s timing chains and exhaust gas recycling system which is $3,442.60.

10.26   It is not apparent in the evidence the basis upon which Mr Chandra contends that the timing chain problems and the crack to the exhaust gas circulation pipe arise from a latent defect in the motor vehicle that existed at the time of supply. He simply claims that “all of the problems” he has experienced with the motor vehicle result from the damage to the transmission system he says was incurred in March 2010.

10.27   Mr Chandra claims that he has had the motor vehicle serviced in accordance with the directions provided in the owner’s manual since the time of purchase. However, the Respondent’s work records show that the motor vehicle was not seen for a service between 10 October 2011 and 26 March 2013. The last service of the motor vehicle carried out by the Respondent was on 10 December 2015.

Applicable law

11. The Applicant seeks to invoke this Tribunal’s jurisdiction under Part 6A of the FT Act to hear and determine consumer claims. However, Part 6A does not itself create a cause of action upon which the Applicant can rely. That cause of action must be identified elsewhere in the law.

12. The Applicant’s claim is framed in a way that suggests that it seeks to rely upon the Respondent’s alleged failure to comply with the guarantee as to acceptable quality that applies in relation to the supply of goods which is contained in section 54 of the Australian Consumer Law (NSW). However, the ACL did not come into force until 1 January 2011, which was after the date of supply of the motor vehicle (23 February 2010). It has no application in this case.

13. Prior to the entry into force of the ACL in NSW, and at the time of supply of the motor vehicle, the FT Act as it was then in force, contained a number of consumer protections in Part 4, including the implied condition that goods will correspond with their description contained in section 40P, and the implied undertakings as to quality and fitness provided in section 40Q, which are potentially relevant in this case. Those sections provided:

40P Supply by description

(1)    In a contract for the supply (otherwise than by way of sale by auction or sale by competitive tender) by a person in the course of a business of goods to a consumer by description, there is an implied condition that the goods will correspond with the description and, if the supply is by reference to a sample as well as by description, it is not sufficient that the bulk of the goods corresponds with the sample if the goods do not also correspond with the description.

(2)    A supply of goods is not prevented from being a supply by description for the purposes of this section by reason only that, being exposed for sale or hire, they are selected by the consumer.

40Q Implied undertakings as to quality or fitness

(1)    If a person supplies (otherwise than by way of sale by auction) goods to a consumer in the course of a business, there is an implied condition that the goods supplied under the contract for the supply of the goods are of merchantable quality, except that there is no such condition by reason only of this section:

(a)    as regards defects specifically drawn to the consumer’s attention before the contract is made, or

(b)    if the consumer examines the goods before the contract is made—as regards any defect that the examination ought to have revealed.

(2)    If a person ("the supplier") supplies (otherwise than by way of sale by auction) goods to a consumer in the course of a business and the consumer, expressly or by implication, makes known:

(a)    to the supplier, or

(b)    to the person by whom any negotiations are conducted,

any particular purpose for which the goods are being acquired, there is an implied condition that the goods supplied under the contract for the supply of the goods are reasonably fit for that purpose, whether or not that purpose is one for which such goods are commonly supplied, except where the circumstances show that the consumer does not rely, or that it is unreasonable for the consumer to rely, on the skill or judgment of the supplier or the person conducting the negotiations.

(3)    Subsections (1) and (2) apply to a contract for the supply of goods made by a person who in the course of a business is acting as agent for the supplier in the same way as they apply to a contract for the supply of goods made by a person in the course of a business, except where that person is not supplying in the course of a business and either the consumer knows that fact or reasonable steps are taken to bring it to the notice of the consumer before the contract is made.

14. In summary, section 40P imposed a condition on the supply of goods to a consumer by description that the goods will correspond with the description. This implied condition is potentially relevant to the Applicant’s complaint about the represented versus actual fuel economy of the motor vehicle. Section 40Q imposed a condition on the supply of goods that the goods would be of merchantable quality. “Merchantable quality” was defined in sub-section 40L(3) to mean goods “that are as fit for the purpose or purposes for which goods of that kind are commonly bought as it is reasonable to expect, having regard to the description applied to them, the price (if relevant) and all other relevant circumstances.”

15. The failure of a supplier who manufactured the goods to comply with those conditions at the time of the supply gave rise to an action for compensation under sections 40V and 40W and an action for damages under section 68 of the FT Act as it was then in force. Such action could be taken against a retailer or manufacturer, but if the action was taken against the retailer, the manufacturer was required to indemnify the retailer (section 40ZA). However, these rights of action were subject to the time limitations imposed by section 40ZB, which was at any time within 3 years after the day on which the cause of action accrued. At the time, these causes of action could be pursued in a court of competent jurisdiction, including under the Consumer Claims Act 1998 (CC Act) as it was then in force, in a predecessor of this Tribunal. For a more detailed explanation of these provisions see Temple & Fisher v Mazda Australia Pty Limited & AMR Motors Pty Ltd [2017] NSWCATCA 17 at [106 t0 129].

16. The terms “cause of action” and “accrues” were not defined in the FT Act as it was in force on 23 February 2010, nor was it defined in the CC Act at that time. It remains undefined in the FT Act as it is now in force. The meaning to be given the terms was considered in some detail by the Appeal Panel of this Tribunal in Sacks v Hammoud [2016] NSWCATAP 225 at [32 to 73] and in Upton v Martin & Stein Antiques Pty Ltd [2016] NSWCATAP 228. Having reviewed the relevant authorities the Appeal Panel in Sacks determined that for the purpose of the limitation period provided in section 7 of the CC Act “a cause of action “first accrues” when facts which constitute the elements or the relevant cause of action crystallise or combine so that all the elements necessary to entitle a consumer claim are present” [at 34]. When a cause of action arises is a question of fact and requires the identification of the applicable measure of damages: Sacks [at 35] following Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 [at 526].

17. The CC Act was repealed and replaced by Part 6A of the FT Act with effect from 1 October 2015. Part 6A confers jurisdiction on the Tribunal to hear and determine consumer claims subject to certain limitations. There are two limitations on the Tribunal’s jurisdiction that are relevant in this case. Section 79S of the FT Act imposes a monetary limit on the Tribunal’s order making power, which is $40,000.00 unless, relevantly, the claim falls within a new car exception to that limit. Section 79L of the FT Act also imposes time limits on the bringing of claims. A claim must be made within 3 years of the cause of action accruing, and within 10 years of the date of supply.

Consideration

18. Having carefully considered the Applicant’s claim, I am satisfied that there are two causes of action upon which it potentially may rely: a claim for breach of contract by the Respondent, and a claim that the Respondent did not comply with the conditions imposed by sections 40P and 40Q of the FT Act as it was in force on 23 February 2010.

19. In this case the Respondent’s contractual obligations to the Applicant are constituted by the contract for sale, and the contents of the manufacturer’s warranty and the Mechanical Protection Plan (retailer’s warranty). The text of these warranties is not in evidence. However, in general terms they may be taken to have provided that the motor vehicle would be replaced or repaired in the event that a manufacturing defect emerged within the warranty periods.

20. As noted above, the manufacturer’s warranty lapsed on 18 February 2013 (the motor vehicle having not travelled more than 100,000kms prior to that date). The retailer’s warranty potentially extended to 18 February 2016. However, it was conditional upon the motor vehicle being presented for service by the Respondent in accordance with the directions provided in the owner’s manual. The evidence establishes that this did not occur after 10 October 2011 up to 26 March 2013. It appears to me that the retailer’s warranty was therefore voided by mid-2012. However, if I am wrong about that, the retailer’s warranty lapsed on 18 February 2016 (the motor vehicle having not travelled more than 200,000kms prior to that date). The contractual relationship between the parties therefore ceased on or before 18 February 2016.

21. Unlike the situation in Upton, in this case the Applicant’s cause of action did not accrue on the date of supply (or purchase) of the motor vehicle. That is not when the putative breach of contract occurred. Rather, the putative breach occurred in this case when the Respondent failed to replace or repair the motor vehicle in accordance with the warranties that were incorporated into the purchase contract. The cause of action for breach therefore accrued from that (or those) date(s). The Applicant’s complaints about the motor vehicle’s transmission, fuel consumption, wheel alignment, rust, and detached tub liner all crystallise in 2010 and 2011. It appears that the wheel alignment, rust and tub liner were attended to at the time without any recurrence of these problems. It is difficult to see how the Applicant could establish any breach of contract with respect to these issues. The manufacturer’s warranty in relation to these items was honoured.

22. The Applicant’s complaints about the transmission and fuel consumption were not ever resolved, but the difficulty for the Applicant is that it is now too late to pursue these claims. The alleged breach of contract by the Respondent in failing to repair the motor vehicle or replace it under warranty due to these defects first accrued in March and July 2010 respectively. The three year limitation period imposed by section 79L of the FT Act in which the Applicant could have made a claim in relation to these alleged breaches therefore ended in March and July 2013 respectively. Even if I were to take a liberal view and determine that the cause of action did not crystallise the first time there was an alleged failure to repair or replace the motor vehicle under warranty but did after these requests were repeated and no repair or replacement occurred it would make no difference. Even if time were taken to run from late 2011, after the motor vehicle had been returned to the Respondent on a number of occasions with complaints about the transmission and fuel economy, the limitation period would have lapsed at the end of 2014.

23. The Applicant’s complaints in relation to the radiator, timing chains, and exhaust gas recycling system first crystallised in March, June and November 2016 respectively. No contractual rights and obligations then subsisted between the parties as, on any view, the retailer’s warranty lapsed on or before 18 February 2016.

24. As a consequence, the Applicant no longer has a cause of action in contract.

25. For the similar reasons, the Applicant is no longer entitled to pursue as a cause of action the Respondent’s putative non-compliance with the conditions contained in sections 40P and 40Q of the FT Act as it stood when the motor vehicle was supplied on 23 February 2010 in relation to the alleged malfunctioning transmission, fuel consumption, wheel alignment, rust and tub liner defects. Any such claim would have had to have been commenced within the three year time period from the cause of action accruing permitted by section 40ZB of the FT Act as it was then in force. On any view, that time period lapsed by the end of 2014 for the reasons stated above.

26. The situation is potentially different with respect to the Applicant’s complaints about the radiator, timing chain and exhaust gas recycling system because any cause of action with respect to these complaints might be viewed as having accrued in 2016. To the extent that it did, the Applicant’s claim has been made within the three year time period permitted by section 60ZB.

27. However, the Applicant then faces a further difficulty, which is the monetary limit imposed upon the Tribunal’s jurisdiction by section 79S of the FT Act as it is now in force, which is $40,000.00. The Applicant seeks orders in the alternative that would have a relevant total value that would exceed this amount. That is, the cost to the Respondent of replacing the motor vehicle with a new equivalent would exceed $40,000.00 (the current comparable range of motor vehicles retails for more than $50,000.00) and the cost to the Respondent of accepting the return of the motor vehicle and refunding its purchase price would be $43,405.00.

28. The Applicant seeks to avoid this difficulty in two ways. First, it argues that the purchase price of the motor vehicle was actually $39,459.09 because the total purchase price included GST in the amount of $3,945.91. Mr Chandra contends that the GST amount should be disregarded because the Applicant is registered for GST purposes and is entitled to claim a GST input tax credit.

29. It should be observed that this contention provides no answer to the relevant total value of any order that would require the Respondent to replace the motor vehicle with a new equivalent. The relevant total value of such an order would exceed $40,000.00 even if GST were to be excluded from the retail price.

30. In any event, Mr Chandra’s submission is misconceived. Sub-section 79S(2) of the FT Act defines the “relevant total” for the purposes of monetary limit imposed under sub-section 79S(1) (relevantly) as follows:

For the purposes of subsection (1), the "relevant total" is the total of:

(a) the amount or amounts (if any) of money to be paid, and

(b) …

(c) …

(d) the value or values of goods (if any) to be delivered or replaced.

31. If the Tribunal were to make an order that the Respondent refund the Applicant the purchase price he paid for the motor vehicle it would necessarily include the GST included in the purchase price and be in the amount of $43,405.00. The supply of the motor vehicle by the Respondent to the Applicant was a taxable supply within the meaning of section 9.5 of A New Tax System (Goods and Services Tax) Act 1999 (GST Act). The Respondent was compelled by law to include GST in the purchase price. The fact that the purchase of the motor vehicle was a creditable acquisition that entitles the Applicant to claim an input tax credit in relation to the GST component of the purchase price (section 11.20 of the GST Act) does not alter the amount he paid for the motor vehicle or its value.

32. In order to be able to maintain a claim under Part 6A of the FT Act the Applicant must therefore bring the application within the scope of the new motor vehicle exception to the monetary limit on the Tribunal’s jurisdiction, which is contained in subsection 79S(6) of the FT Act. However, the difficulty for the Applicant is that this exception only applies to a new motor vehicle that is used substantially for private purposes within the meaning of the MVT Act. Pursuant to sub-section 3(2) of that Act a motor vehicle is not used substantially for private purposes unless it is used for “social and domestic purposes or for leisure.”

33. In this case, it is clear that the motor vehicle was acquired and used for the purpose of conducting the Applicant’s business despite any personal use that Mr Chandra may also have had of the vehicle. The motor vehicle is taxed as a commercial vehicle used for business purposes pursuant to section 8 of the MVT Act. I consider that fact as conclusive of the issue.

34. However, in this respect, I also find the observations of Young J in Bunnings Group Limited (formerly Bunnings Pty Ltd) v Laminex Group Limited [2006] FCA 682 persuasive. His Honour was dealing with a different statutory test in a different legislative context in that case. However, his observation that in determining if goods are of a kind ordinarily acquired for “personal, domestic or household use or consumption’ (the test he was applying in that case) it is relevant to inquire into the essential character of the goods in question, which should be determined objectively, but also having regard to the evidence concerning the design, marketing, pricing and potential uses of the goods in question” (at [83 to 86]) is relevant in this case. I note that this test was applied by the Appeal Panel of this Tribunal in Safi v Heartland Motors Pty Ltd t/as Heartland Chrysler [2016] NSWCATAP 80 at [64ff], albeit in a different legislative context to the present case. Viewed objectively, for the reasons stated above, I am satisfied that the motor vehicle in this case is of a kind ordinary supplied for commercial purposes, rather than private purposes, and that it was supplied and used for commercial purposes.

35. It follows from this analysis that the Applicant’s claim exceeds the monetary limit on the Tribunal’s jurisdiction imposed by section 79S of the FT Act as the motor vehicle cannot fall within the new car exception as it was not supplied for private purposes.

36. For completeness, I note that even if this cause of action had been available to the Applicant, there is no evidence before the Tribunal that is capable of proving that the radiator leak, the timing chain malfunction, and the defective exhaust gas recirculation system manifested as a result of latent manufacturing defects that were present in the motor vehicle at the time of supply. I further note that at the time these defects manifested the motor vehicle had been in use for more than six years and had travelled approximately 120,000 to 125,000 kilometres.

Conclusion

37. For the reasons stated above the Applicant’s claim cannot succeed because the Tribunal has no jurisdiction to deal with it. The claim has not been made within the time periods permitted by section 79L of the FT Act as it is now in force or by section 40ZB of the FT Act as it was in force on 23 February 2010 when the motor vehicle was supplied to the Applicant. Additionally, the relevant total value of the Applicant’s claim exceeds the monetary limit imposed by section 79S of the FT Act as it is now in force.

P French

General Member

Consumer and Commercial Division

4 August 2017

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 06 September 2017