Bob Proestos v Toyota Motor Corporation Ltd

[2014] NSWCATCD 153

NSW Civil and Administrative Tribunal

New South Wales

• Amendment notes

Medium Neutral Citation:	Bob Proestos v Toyota Motor Corporation Ltd [2014] NSWCATCD 153
Hearing dates:	23 July 2014
Decision date:	12 August 2014
Jurisdiction:	Consumer and Commercial Division
Before:	M Eftimiou General Member
Decision:	The application is dismissed having considered the material place before it, the Tribunal is not satisfied, at the civil standard of proof that the grounds required to make the order sought have been established.
Catchwords:	Acceptable quality
Legislation Cited:	Australian Consumer Law Consumer Claims Act 1998 Fair Trading Act 1987
Cases Cited:	Read v Brown (1882) 22 QBD128 Port of Melbourne Authority v Anshun Pty Ltd ( 1981) 147 CLE 589 City Index (Australia) v Health & Anor [2001] NSWSC1150 Fayless v LCCP Pty Ltd RP 07/46374 unreported
Category:	Principal judgment
Parties:	Bob Proestos (applicant) Toyota Motor Corporation Ltd (respondent)
File Number(s):	MV 14/15339
Publication restriction:	Nil

reasons for decision

Application

1. On 6 July 2010 the applicant purchased, through private sale, a 2007 Toyota Land Cruiser 200 series. The vehicle was fitted with a V8 diesel engine.

1. On 10 July 2011 the applicant was travelling on the Mitchell Highway west of Dubbo when the engine suffered a failure which resulted in the vehicle not being driveable and totally immobile.

1. The engine of the vehicle was replaced by the applicant on 30 July 2011.

1. The applicant states that there was a manufacturing fault in the vehicle that caused the failure of the engine.

1. The applicant seeks to rely on two expert reports prepared by Geoof Senz, a Specialist Automotive Consultant, as well as other documents.

1. The respondent denies liability and opposes the order sought.

1. To successfully pursue an application at the Tribunal, it is necessary for an applicant to have the evidence to prove the claim. It is not sufficient for an applicant to think they have a claim; they have to be able to prove it. This is done by the production of evidence. Evidence can take several forms, such as documents, photographs, sound or video recordings, and witness statements about what that witness saw or heard. Evidence can also be given by sworn testimony at a hearing.

1. There are rules of evidence which have been established to ensure fairness in the proceedings. The major one in civil, as opposed to criminal, cases is that the standard of proof rests on the principle of the balance of probability. That is, it is more probable than not that what the person claims happened is true. Where there are competing versions, the Tribunal must be reasonably satisfied that one assertion has been demonstrated to be true in a greater degree than the opposing version.

1. In determining claims at the Tribunal, the onus of proof requires the applicant to convince the Tribunal that the applicant is entitled to the relief sought. This means that the applicant must prove each element of the claim, or cause of action, in order to recover damages or loss.

1. If the actions of a trader or supplier of goods or services, or any warranty arising thereto, infringe the Australian Consumer Law, or New South Wales legislation, including the Consumer Claims Act 1998, then the Tribunal may entertain a claim by a consumer.

1. The latter Act allows the Tribunal to make orders concerning the payment of money (such as a refund or the cost of rectification, but not both), work to be performed (such as repairs), or that the goods be replaced with similar goods which match the description of the goods required to satisfy the original transaction.

1. In a case of negligence, the applicant must show that the respondent owed the applicant a duty of care and that this duty was breached by the respondent so that the applicant, who suffered damage as a result, is entitled to compensation to recuperate any loss of income, medical expenses, rehabilitation costs and future economic losses.

1. On the other hand, if the application asserts a breach of contract, the applicant must show the existence of the contract. Damages for breach of contract are awarded as a substitute for performance in that they put the applicant in the position they would have been in had the contract been performed properly. Punitive damages are not available. The loss claimed must not be too remote from the breach and the applicant has to do whatever is reasonable to reduce or mitigate the damage suffered.

1. A tort is a civil wrong which occurs when a person's action, or failure to act, causes damage to a "neighbour". A neighbour is recognised as anyone, even a stranger who, when it is reasonably foreseeable, may suffer damage or injury as a result of the tort being committed. Damages in tort are similarly awarded to place the applicant in the position they would have been had the tort not occurred.

1. Under Australian Consumer Law the manufacturer of the vehicle guarantees that the motor vehicle is of acceptable quality. Vehicles bought from one off sales by private sellers are only covered by the guarantees as to title. However, the implied warranties under the Australian Consumer Law apply. Vehicles bought before 1 January 2011 are not covered by Australian Consumer Guarantees. These are covered by statutory implied conditions and warranties under the Fair Trading Act 1987 and the Sales of Goods Act 1923. There are implied conditions as to the quality of fitness found in both those Acts.

1. The issue before the Tribunal is whether the vehicle was fit for purpose or not of merchantable quality at the time of manufacture of the vehicle? However before the Tribunal determines this issue, the Tribunal must be satisfied that it has jurisdiction to hear and determine the claim.

1. Section 7 of the Consumer Claims Act 1998 gives to the Tribunal jurisdiction to determine consumer claims. Section 7 (4) sets out the limitation periods to the Tribunal's jurisdiction. Section 7(4) relevantly provides that 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.

(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.

1. The goods were not supplied by the respondent to the applicant so that section 7(4)(b) does not apply in this instance.

1. In this matter the cause of action arose when the vehicle was manufactured in 2007. The applicant has argued that the cause of action arose when the vehicle broke down in 2011. This is not correct in law.

1. Cause of action "means every facet which it will be necessary for the plaintiff to prove, if traversed, in order to support the right to judgment of the Court" (Read v Brown (1882) 22 QBD 128 at 131). In Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 Brennan J described a cause of action as "the substance of an action as distinct from its form" or "the facts which support a right of judgment". If the claim is brought as a breach of contract, generally at the date of the breach of the contract is the cause of action. If the claim is brought in Tort, in most negligence cases when the damage is discovered gives rise to the cause of action. If the claim is brought in Statute, the cause of action arises as set out in the relevant statute.

1. As the applicant had no contract with the respondent, the applicant seeks to rely on the implied statutory warranties. The Tribunal has considered whether it has jurisdiction to deal with the claim under the Fair Trading Act (and the equivalent Trade Practices Act sections). Section, 40U and 40W(1), which are in Part 4 of the Fair Trading Act related to actions in respect of "unsuitable goods" and actions in respect of "goods of unmerchantable quality" respectively. They allowed for the recovery of compensation from a supplier or manufacturer which contravenes its obligations under the relevant section in an action against the supplier "in a court of competent jurisdiction". Fair Trading Act. (FTA)

1. Neither of these sections of the FTA nor Part 4 of the Act gives any specific jurisdiction to the Tribunal to deal with actions against suppliers which contravene their obligations. Actions for damages arising from a contravention of sections 40U and 40W of the FTA are dealt with in section 68 of the FTA, which provides:

68 Actions for damages

(TPA s 82)

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, 5D, 5E, 5F or 5G may recover the amount of the loss or damage from the other person or from any person involved in the contravention, in a court of competent jurisdiction.

(1A) A reference to loss or damage in subsection (1) does not, if the loss or damage arises from a contravention of Part 5 (section 43 excepted), include a reference to:

(a) the death of a person, or

(b) personal injury to a person (including any pre-natal injury, any impairment of the person's physical or mental condition and any disease).

(2) Proceedings 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.

(2A) Subsection (2) does not apply to a cause of action to which Division 6 of Part 2 of the Limitation Act 1969 applies.

(3) If the matter of such loss or damage arises in connection with a matter the subject of proceedings in the Tribunal, the Tribunal may proceed to decide it, and in so doing may award such sum, and make such ancillary orders, as it thinks fit.

1. In the matter City Index (Australia) v Heath and Anor[2001] NSWSC 1150 (14 December 2001), Master Malpass stated as follows in relation to whether the NSW Fair Trading Tribunal (the precursor to the Consumer Trader and Tenancy Tribunal)and the NSW Civil and Administrative Tribunal) had jurisdiction to entertain applications made under the FTA:

27 ... [T]he Tribunal does not have jurisdiction in FTA matters other than that conferred by s 68 (3) of the Act. This is a jurisdiction to award a sum and make ancillary orders where the loss and damage arises in connection with a matter the subject of proceedings in the Tribunal. It cannot be said that s 21 of FTTA, of itself, confers jurisdiction to entertain FTA matters.

1. Master Malpass' decision was referred to in the reasons given by the then Chairperson of the CTTT in Fay Lees v LLCP Pty Ltd RP 07/46374 [unreported, 24 April 2008]. The Tribunal stated:

"The Tribunal has no independent jurisdiction under the Fair Trading Act . That is, an action for damages under section 68, without anything more, cannot be commenced in the Tribunal...

The applicant submits that so long as there is an application before the Tribunal under one of the Acts that expressly confers jurisdiction on the Tribunal, e.g. the Home Building Act 1989, the Residential Parks Act or the Consumer Claims Act, s 68(3) of the Fair Trading Act permits the Tribunal to deal with a claim involving a contravention of s44 of that Act. That is undoubtedly correct. (See City Index (Australia) v Heath [2001] NSWSC 1150 - this case was not referred to by the parties but is on point.)

...The Tribunal is a creature of statute and only has such jurisdiction as is conferred upon it by the Parliament. Before any consideration of s 68 of the Fair Trading Act can arise there must be a valid application under an Act which directly confers jurisdiction upon the Tribunal."

1. Notwithstanding the fact that the Civil and Administrative Tribunal Act lists the FTA as one of the pieces of legislation which confers jurisdiction on the Tribunal, the Tribunal finds that the power of the Tribunal to deal with claims made under the FTA is limited to that set out in section 68(3); that is, the Tribunal can consider a claim involving a contravention of a relevant provision of the FTA only if it arises in proceedings commenced under legislation which expressly confers jurisdiction on the Tribunal. The Tribunal has no jurisdiction to deal with this application solely under the provisions of the FTA. It only has jurisdiction to consider the claims made under sections 40U and 40W of the FTA if the claim constitutes a consumer claim under the Consumer Claims Act.

1. The Tribunal finds that the cause of action giving rise to the claim first accrued in 2007. As the application was lodged more than 3 years after the date on which the cause of action first accrued, the Tribunal does not have jurisdiction to hear and determine the claim. There was no supply of goods or services to the applicant from the respondent and therefore the provisions of section 7(4)(b) are not relevant. An application can only be considered under the Fair Trading Act if it first falls within the jurisdiction of the Tribunal under the Consumer Claims Act.

1. Accordingly, the Tribunal finds that it has no jurisdiction to deal with the claim; either under the Fair Trading Act or under the Consumer Claims Act and the Tribunal must dismiss the application.

1. If the Tribunal is wrong in its finding regarding jurisdiction, the Tribunal has gone on to consider the substantive merits of the claim.

1. The applicant sought to rely on two reports of Mr Senz together with Mr Senz oral evidence at the hearing. Mr Senz concluded at the hearing that after reconsidering the photographic evidence it is apparent that the cause of failure relates to alternative fuel usage. The left hand side of the engine had failed due to abnormal combustion brought about by oil entering the cylinders. The most likely causation being the left hand turbo charges was discharging excessive oil which was puddling in the intercooler and that has tipped into the left hand side of the engine. Mr Senz told the Tribunal that it was a fair analytic step to get to that point. Mr Senz told the Tribunal that he could not say whether it is a manufacturing defect that has caused the issue. Mr Senz describes the issue as an "inherent failure" in his report. In his evidence and his cross examination he told the Tribunal that he could not say whether it is a manufacturing defect. It is important to note, without in any way derogating the experience and expertise of Mr Senz that he has proffered several scenarios as to why the left engine failed. He told the Tribunal in evidence and during cross examination by the respondent that he has been pondering over the scenarios for some time and it was only on the weekend prior to the hearing after re-examining the evidence that he concluded that the left hand side of the engine has failed due to abnormal combustion brought about by oil entering the cylinders.

1. The applicant gave evidence that the vehicle was purchased from a private dealer in 2010. At that time the vehicle was three years old and had travelled approximately 85,975 km. The applicant's further evidence is that from the time of purchase until the time of engine failure the vehicle had been serviced on nine different occasions by no less than six different motor mechanics. In addition the applicant caused to have an aftermarket engine performance device fitted to the vehicle.

1. On or around early 2013 the applicant filed proceedings in the Tribunal in matter MV 12/42500 naming the manufacturer or supplier of the aftermarket engine performance device as a respondent and seeking a sum of $25,931.90 alleging that the device had caused the engine failure. The matter was dismissed by the Tribunal as the applicant was not able to prove his case. In that matter Mr Senz gave evidence for the respondent and he stated unequivocally in his opinion that what happened to the applicant's engine would have happened with the after market unit was fitted or not. The Tribunal accepted this evidence and dismissed the claim.

1. As stated earlier the applicant has the onus of establishing the claim. The applicant has failed to satisfy the Tribunal on the balance of probabilities that the goods that were manufactured in 2007 by the respondent were not of merchantable quality. The applicant was the second owner of the vehicle. Numerous mechanics worked on the vehicle from the period that the vehicle was manufactured until the time of the engine failure in 2011. The applicant's own expert has not been able to say with any certainty what the cause of the engine failure was. As recent as a few days before the hearing Mr Senz determined an alternative explanation for engine failure. An explanation that Mr Senz was not able to say with any certainty was due to a manufacturing defect.

1. Accordingly, the application must fail.

M Eftimiou

General Member

Civil and Administrative Tribunal of New South Wales

12 August 2014

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

Amendments

08 December 2014 - corrected paragraph numbering

Amended paragraphs: 24 - 33

03 December 2014 - removed duplicate paragraph numbering

Amended paragraphs: 23 and 24

Decision last updated: 08 December 2014