Celovic v Righetti - [2025] NSWCATCD 3

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation: Celovic v Righetti [2025] NSWCATCD 3
Hearing dates: 23 September 2024
Date of orders: 17 January 2025
Decision date: 17 January 2025
Jurisdiction: Consumer and Commercial Division
Before: J Alder, General Member
Decision:
(1) The Respondents, Ann Maree Righetti and Mark Romano Righetti trading as Engine Masters Australia, are to pay the Applicant, George Celovic, the sum of $5,000 within 14 days from the date of these Reasons.

Catchwords:
CONSUMER CLAIM – defective engine - where a party is both a supplier and a manufacturer - where a party has supplied both goods and services - when does the cause of action first accrue against a supplier for failure to comply with the guarantee as to acceptable quality - when is damage first sustained - did the consumer require the supplier to remedy the failure within a reasonable time - reasonable costs incurred by the consumer in having an engine repaired – foreseeable loss and damage – misleading and deceptive conduct - assessment of damages - failure to mitigate – remoteness

Legislation Cited:
Australian Consumer Law (NSW), ss 2, 3, 11, 18, 54, 55, 60, 236, 259, 260, 261, 262, 263, 267, 271, 272
Competition and Consumer Act 2010 (Cth)
Fair Trading Act (NSW) 1987, ss 28, 74(3), 79L
Civil and Administrative Tribunal Act (NSW), ss 38(4), 53(1), 60

Cases Cited:
Australian Competition and Consumer Commission v Valve Corporation (No 3) (2016) 337 ALR 647 [2016] FCA 196
Barbour v Autosports Five Dock Pty Ltd [2020] NSWCATAP 141
Cairns v AHG Newcastle Pty Ltd [2020] NSWCATAP 103
Capic v Ford Motor Company of Australia Pty Ltd [2021] FCA 715
Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54.
Como Leather Pty Ltd v Harris [2017] NSWCATAP 95
D’Agostino v Anderson [2012] NSWCA 443
Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31; 110 ALR 608
Do Carmo v Ford Excavations Pty Ltd [1984] HCA 17; (1984) 154 CLR 234
Elivir Halilovic v Prestige Motor Sport Sydney Pty Ltd trading as Prestige Motor Haus Sydney [2018] NSWCATCD 4
Hawkins v Clayton [1998] HCA 15; (1988)164 CLR 537
Little v Khoury T/As GAS-250 Restorations [2018] NSWCATCD 47
McBride v Christies Australia [2014] NSWSC 1729
Medtel Pty Ltd v Courtney [2003] FCAFC 51
Moloney v Taylor [2016] NSWCA 199
My Pool Safety Inspector Pty Ltd v MCM Sutherland Pty Ltd [2024] NSWCATAP 58
Sacks v Hammoud [2016] NSWCATAP 225
Safi v Heartland Motors Pty Ltd t/as Heartland Chrysler [2016] NSWCATAP 80
Sutherland Shire Council v Heyman[1985] HCA 41
Tang t/as Better Aquariums v Karatasoulis [2018] NSWCATAP 140
Upton v Martin & Stein Antiques Pty Ltd [2016] NSWCATAP 228
Wardley Australia Ltd v Western Australia (1992) 175 CLR 514
Wilson v Winnicott [2021] NSWCATAP 211
Winnote Pty Limited (in liq) v Page [2006] NSWCA 287
Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16; 216 CLR 515

Category: Principal judgment
Parties: Applicant: George Celovic
Representation: Applicant: self-represented
Respondents: Ann Maree Righetti

File Number(s): 2023/00445228
Publication restriction: Nil

REASONS FOR DECISION

Introduction

The applicant seeks a money order in the sum of $20,577.28 for costs he incurred during 2024 in purchasing motor vehicle parts to repair a high performance engine that the respondents had pre-made and sold to him in 2017.

Background and claim

The applicant is the owner of a 1937 hot rod Bedford motor vehicle which he acquired in 2012 (vehicle). He is also a licensed mechanic.
The respondents are a family run partnership. They describe themselves as engine builders and reconditioners, specialising in building and selling new engines and reconditioning old engines. They also operate a retail shop whereby they sell engine parts.
On 11 November 2017 the applicant purchased from the respondents a brand new Chevrolet performance engine (engine) that the respondents had built. The purchase price for the engine was $25,672 (incl GST).
During November 2017 to April 2018, the applicant removed the vehicle’s existing engine and replaced it with the new engine, which he installed himself.
On or about 10 July 2023, upon the engine omitting a large backfire, the applicant alleges he discovered faults with the engine’s machining and assembly. He alleges that during their construction of the engine, the respondents modified and damaged the inlet manifold gaskets in an attempt to cover up manufacturing faults, namely gaps between the cylinder head and inlet manifold, leading to air leaks, backfiring and engine damage. He also alleges a component of the engine, the supercharger, was not a genuine part.
On 10 October 2023, the applicant notified the respondents of the issues.
The respondents dispute the engine or its parts were faulty and dispute their workmanship was not performed with care and skill and say the applicant, by modifying the engine, has caused his own loss. They dispute the supercharger is not a genuine part and submit the current condition of the engine reflects six years’ wear and tear. They were always willing to assist, but submit the applicant has credit issues.
On 4 December 2023 the applicant filed an application asking the Tribunal to order the respondents to pay him an amount of $22,372. This amount was not particularised and no repairs had been carried out at that stage (the applicant appears to have believed this was price he paid for the engine). The application did not specify any cause of action by reference to any statute or common law.
The evidence of the applicant included expert evidence from a master automotive mechanic, Mr David Marston. Mr Marston’s report refers to the respondents breaching the consumer guarantee provisions of the Australian Consumer Law(NSW) (ACL) applicable to the supply of goods and services.
In Mr Marston’s opinion, the engine assembly was of poor quality and the engine was not fit for purpose and the supercharger was not a genuine part.
The supplier did not put forward any independent expert evidence to the Tribunal.
On 23 July 2024, the applicant advised he had had the engine completely rebuilt by a professional engine builder.
On 23 September 2024 (the day of the final hearing) the applicant provided tax invoices to prove he had purchased replacement parts to facilitate the rebuild.
During the hearing, the applicant clarified he sought a money order of $23,822.28, which he says is made up of $20,577.28, being the cost of the engine parts he purchased during April 2024 to June 2024 to facilitate the engine repairs, plus $3,245, being costs of his expert witness.

Hearing, procedural history and documents relied upon

On 23 September 2024 the matter came before me for a three hour hearing.
The applicant and Ms Ann Maree Righetti, one of the respondents, appeared virtually. The applicant’s expert witness, Mr Marston, also appeared virtually and gave evidence.
The hearing on 23 September 2024 was the third time the matter had been before the Tribunal following six listings and four adjournments.
On 15 January 2024 at the conciliation hearing in Albury, the respondents were recorded as not in attendance but due to a miscommunication they were outside the courthouse and not called in. The Tribunal directed the parties to file and serve documents (the applicant by 5 February 2024 and the respondents by 29 February 2024) and adjourned the matter to a two hour virtual hearing, which was to take place on 28 March 2024.
Both parties attended the formal hearing on 28 March 2024 virtually, but it was adjourned due to the applicant having filed his documents over three weeks late (on 29 February 2024), and the respondents not having filed any documents. The respondents were given further time to do so, by 15 April 2024.
Three further allocated hearing dates were adjourned by the Tribunal at the respondents’ request without the parties being required to appear: on 6 June 2024 due to both respondents being overseas, on 22 July 2024 due to the respondents attending a funeral and on 6 August 2024 due to a spinal injury of Ms Righetti.
At the hearing on 23 September 2024, the applicant relied on the following documents:

report of David Marston of Principal Automotive Expert Services dated 13 February 2024 (filed 29 February 2024) marked exhibit A1 with appendices 1 – 5 including:

curriculum vitae (appendix 1)

letter of instruction from applicant (appendix 2)

code of conduct (appendix 3)

documents, invoices, quotes, Dyno readings and images provided by applicant (appendix 4)

documents produced by Mr Marston (appendix 5) including:

15 photos of the gaskets (images 0633 to 0659)

specification sheets from two suppliers of inlet manifold gaskets, Edelbrock Gaskets and Fel-Pro Performance Gaskets, stating the recommended type and thickness of the gaskets.

submissions and USB filed 26 July 2024 containing two photo and two videos, marked exhibit A2.

amended expert report of David Marston dated 30 August 2024 filed 10 September 2034 marked exhibit A3.

bundle of invoices for the purchase of replacement engine parts filed 23 September 2024 marked exhibit A4.

amended expert report (in markup) of David Marston dated 30 August 2024 (filed 27 September 2024) marked exhibit A5

The respondents relied on the following documents:

bundle filed 16 April 2024 (40 pages) marked exhibit R1 including

timeline of events

response to report of David Marston

response to applicant’s documents

photos of the engine provided by applicant

Facebook postings by the applicant

correspondence between the parties

correspondence from the supplier of the Weiand supercharger

response to correspondence (3 pages) filed 12 August 2024 marked exhibit R2

response to amended expert report (8 pages) including links to videos posted on the applicant’s Facebook page and USB stick filed 18 September 2024 marked exhibit R3 containing

video files of videos posted on the applicant’s Facebook page

pictures posted on the applicant’s Facebook page.

The applicant said he had not received the respondents’ USB stick. During the hearing Ms Righetti emailed the applicant a link to a folder containing the videos and photos.
At the conclusion of the hearing I reserved my decision and made orders that the applicant provide a version of Mr Marston’s expert report highlighting the changes he had made since his first report. I also directed the respondents be given an opportunity to respond to the applicant’s late evidence filed the morning of the hearing.
Following the hearing, on 4 October 2024 the respondents filed submissions (8 pages) and two letters of support from suppliers of automotive parts to the respondents, marked exhibit R4.

Facts

On 29 July 2017, Mr Paul Fox, an employee of the respondents provided a quote for a new Chevrolet engine to the applicant.
On 10 October 2017, the applicant paid the respondents a deposit of $4,180.
On 7 November 2017, Mr Fox sent an email to the applicant with a link to a Dyno Tune video of tests conducted on the engine.
On 11 November 2017, the applicant attended the respondents’ workshop to pick up the engine and paid the balance of $21,492 in cash.
On 11 November 2017,the respondents issued a tax invoice N15827 for $25,672 which itemises some 54 different components said to have been used in the assembly of the engine.
By April 2018, the applicant had completed installation of the engine.
On 6 May 2018, the applicant sent an email to the respondents and attached eight photos of the engine, stating:

“I am very happy with the motor and gearbox I have recently purchased off you. …the engine as travelled some 400kms and I have noticed an oil leak coming from the rear of the valley cover. Please give me a ring or email to talk about this problem”

The photos (which are date stamped 14 April 2018) show the engine fitted in the vehicle, and a photo of the odometer showing 6,159kms, indicating the starting speedometer reading was approximately 5,759kms (6,159kms less 400kms).
On 27 October 2018, the vehicle was shown at a car show with images showing the fitted engine.
In August 2020 the vehicle underwent a modification assessment by an authorised certifier, Fink Engineering at Unanderra. A compliance certificate was issued by Transport NSW. The odometer reading at this time was 8,910 kms, with the vehicle having driven 3,151 kms in the two years and four months since the applicant installed the engine.
On 23 May 2021, the applicant posted a Facebook video showing the engine running.
On 23 October 2021, the applicant posed a Facebook video showing the engine running.
On 18 December 2021, the applicant posted a Facebook video titled, “What a Weapon” showing the vehicle being driven on public roads with excessive acceleration.
On 18 March 2023, the applicant posted a Facebook video showing the vehicle as stationary and the engine being revved manually and getting ready for a “Powercruise” race event.
On 18 March 2023, the applicant posted a Facebook video showing the vehicle running smoothly in preparation for the Powercruise event.
On 10 July 2023, the applicant alleges he attempted to start the engine and it omitted a very large backfire.
On 10 July 2023, the applicant says he started “stripping” the engine down.
On or about 10 July 2023, the applicant contacted the respondents to request a quote for additional engine parts to create a “boost” in the engine.
The respondents prepared a quote dated 10 July 2023.
On 31 July 2023, the applicant sent an email to the respondents stating: “I forgot to add the inlet manifold gasket can you please add that to the quote”.
On 31 July 2023, the respondents emailed the applicant a quote for $1,875.19 dated 10 July 2023 (#EST91) for the additional requested parts, including gaskets.
On 2 August 2023, the applicant paid $1,875.19 to the respondents for the additional parts.
The sales order dated 2 August 2023 indicates the following parts were purchased by the applicant:

Weiand supercharger gasket and seal kit ($149.09)

Alloy short valve covers chev ($331.45)

Blower inlet gasket ($30.91)

Blower base gasket ($21)

Carburettor base gasket 4 hole ($61.08)

Accelerator pedal ($247.73)

Long throttle cable kit ($157.64)

Radiator overflow tank ($130.36)

Supercharger belt ($309.09)

Blower pulley ($200)

Intake gaskets ($52.73)

Valve cover gasket set ($13.64).

The applicant performed the upgrades on the engine himself.
On 1 September 2023, the applicant posed a Facebook video which showed the engine running with the caption: “The beast is alive again, after many nights, she lives.”
On 8 September 2023, as per a photo taken by the applicant that day (p 19, applicant’s documents) the odometer reading was 10,454 kms, meaning it had travelled approximately 5,000kms since the engine was installed in April 2018 and 1,544 since certification three years earlier.
On 25 September 2023, the applicant instructed David Marston to prepare an expert report, informing him that: “the engine has only done 1,544 since fitting” and “the engine had a miss and backfire on first start after fitting.”
On 10 October 2023, the applicant raised a first complaint with the respondents concerning the gaskets. He sent an email stating:

“I have attached pictures of the inlet manifold gasket after I pulled the manifold off. As you can see the manifold gasket has been doubled up and holes are elongated to make it fit. Please advise how we can rectify this problem. If I do not hear from you within 7 days I will be contacting my solicitor for legal advice.”

On 10 October 2023, the respondents (Mark Righetti) replied stating:

“I have thoroughly reviewed the photos you sent and it’s apparent that the holes exhibit a notable disproportion in size. This appears to be a consequence of the deformation resulting from the engine’s operation after a backfire and continued use in its compromised state.”

Mr Righetti asked to inspect the engine to verify the two gaskets and indicated he wished to help.
On 11 October 2023, Mr Marston sent an email to the applicant stating:

“If you can show the engine has only been used in a limited capacity, I think that a Tribunal would seriously consider the ACL…”

On 17 October 2023, the applicant emailed Mark Righetti stating:

“.. yes the engine did backfire but after that it was manually pushed around for a year and has only done 20kms. I have the gasket for you to see. Now needing to know what would be the best way to move forward. I realise the motor is nearly 6 years old, but it has only been driven 1,500kms in total since I purchased it from Engine Masters Australia. There is also an issue with the blower as I believe that a different one has been supplied… I am happy to bring the engine to you in Albury so we can both look at the engine or if you have someone around the Batemans Bay that you would recommend I can take it there.”

The applicant says he did not receive a response to his 17 October email. He says he re-sent his email dated 17 October 2023 on 30 October 2023.
On 23 November 2023, the applicant shared a photo of the vehicle on Facebook with the words: “Crank it up at Batemans Bay.”
On 29 November 2023, the applicant wrote a letter to the Tribunal stating: “Due to work commitments my vehicle was parked up for 5 and a half years and has only been driven 1,500kms since the new motor was put in. At the beginning of 2023… I started the 350 Chev Motor and it backfired.”
On 30 November 2023, the applicant shared a photo of the vehicle on Facebook with the words: “Send it till ya bend it.”
On 4 December 2023, the applicant filed the Tribunal application.
On 15 January 2024, a first conciliation took place.
On 18 January 2024, the applicant sent an email to the respondents stating: “I am hoping we would be able to reach a resolution for both parties regarding the Chevrolet Engine I purchased from you.”
On 24 January 2024, the respondents sent an email to the applicant stating:

“The nature of your requests remain somewhat unclear… you procured replacement intake gaskets in July 2023, preceding any overt manifestations of engine distress… we seek clarity on your expectation from Engine Master Australia in this matter. What is it you actually want from us?”

On 28 March 2024, both parties were in attendance for the formal hearing. The Tribunal adjourned the matter to a further 3 hour virtual hearing as the applicant had been late in filing his documents. The respondents did not take up the Tribunal offer to inspect the engine.
On 5 April 2024, the respondents requested a photo of the vehicle’s current odometer.
On 8 April 2024, the applicant responded to the effect he would not supply a reading as he had already filed his documents (as part of his submissions filed 29 February 2024 he had included at page 19 a photo of the speedometer taken on 8 September 2023 of 10,454kms).
During 8 April 2024 to June 2024, the applicant purchased various parts from various suppliers to repair the engine. He is claiming the cost of parts only. He said the labour was carried out by Hi-Tech Engine Balancing, a friend and engine reconditioner.
On 23 July 2024 the applicant stated in his submissions: “I have now had the motor completely rebuilt by a professional engine builder at my own expense.”
As at 23 September 2024,10,857 kms was recorded on the odometer as per a photo emailed from the applicant’s expert during the hearing. This indicated the hot rod had travelled at least 400 kms in 12 months since 8 September 2023, when the odometer reading was 10,454 kms.

Evidence of quantum of loss

On 22 September 2024 (the day before the hearing) the applicant supplied invoices and other documents from various suppliers which he relies on as proof he has paid $20,577.28 for parts as follows:

Carburettors repair and rebuild - $800 (email from Richard Barilla)

Distributor - $200 (Richard Barilla)

Blower - $1,474 (Jeff Ramsay Engineering) dated 1 May 2024

$10,055.10 for engine parts and machining (Hi-Tech Engine Balancing dated 15 May 2024)

Header stud kit - $128.21 (Rocket Industries dated 3 June 2024)

Flex plate bolts - $45.00 (Rocket Industries dated 3 June 2024)

Tourue bolts - $29.30 (Rocket Industries dated 3 June 2024)

Holley fuel regulator - $221.70 (Rocket Industries dated 17 June 2024)

2 x 1/8 inch NPT extension - $24.96 (Rocket Industries dated 21 June 2024)

Head studs - $466.30 (Rocket Industries dated 8 April 2024)

Main studs - $195.80 Rocket Industries dated 8 April 2024

Blower belt - $489.50 (Rocket Industries dated 9 May 2024)

Blaster high vibration coil - $144.60 (Rocket Industries dated 6 May 2024)

Coil bracket - $17.60 (Rocket Industries dated 6 May 2024)

MSD street fire CDI ignition - $422.50 (Rocket Industries dated 6 May 2024)

90 degree plug leads - $257.50 (Rocket Industries dated 6 May 2024)

Main bearings - $156.64 (Rocket Industries dated 15 April 2024)

Steel core intake - $91.12 (Rocket Industries dated 15 April 2024)

Timing cover gasket - $27.71 (Rocket Industries dated 15 April 2024)

Oil pan gasket - $47.26 (Rocket Industries dated 15 April 2024)

Rear main seal - $72.67 (Rocket Industries dated 15 April 2024)

4 x Holley square bore base - $98.43 (Rocket Industries dated 3 June 2024)

Collector gaskets - $30 (Rocket Industries dated 3 June 2024)

Exhaust gasket - $45 (Rocket Industries dated 3 June 2024)

Blower manifold - $2,080 (Rocket Industries dated 15 April 2024)

12 inch torque converter - $2,090 (Rocket Industries dated 15 April 2024)

Fitting and hoses - $600 (invoice from MSCN Motorsport Connections) for $370.88 addressed to Nick Perkovski does not appear to relate to this claim)

Oil filter - $16.38 (no receipt)

Oils - $250 (no receipt)

Applicant’s evidence and submissions

The applicant lives in Batemans Bay.
He has been a licensed mechanic for some 30 years and is an interstate truck driver.
When he bought the vehicle in 2012, it had a 302 Ford engine. He did not drive it very much but showed it at car shows.
He had always wanted a “blown” engine, which means an engine that has a supercharger (air pump) for enhanced performance.
He saw an engine he liked on the respondents’ website and made an inquiry.
On 29 July 2017 the respondents emailed him a quote.
On 7 August 2017 he sent an email to the respondents asking about measurements and ultimately decided to buy the engine.
He drove to the respondents’ workshop in Albury to pick up the engine. The engine was in a box, so he did not inspect it.
Prior to purchase, the respondents emailed him a link to the dyno readings for the engine. He observed a Weiand logo on the supercharger. However, he is not sure if the video of the dyno readings for the engine related to the engine he purchased. They are dated 11 September 2017, two months before he purchased the engine. The respondents sold many chev engines and it is feasible it could be a different engine.
He took out the existing engine and “slowly” fitted the new one. It took 6 months to install it in his spare time as he was working as a truck driver six days a week. He completed the installation by April 2018. He did it all himself. He had to re-wire it. He followed the manufacturer’s recommended procedures.
He had to modify the vehicle so the engine could fit. This meant modifying the engine mounts and brackets to hold the gear box up. This was a common practice.
His oral evidence was that he immediately noticed a problem with starting the engine, i.e. in April 2018. When he turned it on and tried to wind it over, it wouldn’t start. He instructed his expert who states at paragraph 21(j) of his report:

“…I am instructed that even though the engine was installed following manufacturer’s recommended procedures, this engine has always had problems since its initial start-up. The engine always coughs/splutters, being very difficult to start from day of installation when it backfired.”

He said the “problem developed as the car got driven”.
He checked the plugs which helped a bit. He said he “let it go”.
There was also a minor oil leak.
In May 2018, he sent an email to the respondents that he was very happy with the motor and gearbox he had bought from the respondents but that he noticed an oil leak from the rear of the valley cover. He received no reply.
His oral evidence was that he was able to identify the source of the leak, which was in the top part of the motor near the oil gauge, which was loose. He attested that he fixed the leak himself by resealing the grub screw, which was a minor repair.
He did not use the hot rod much over the next five years as he was busy with work. He took the car to a few car shows. He changed the oil every three months. He did no repairs.
In August 2020, the vehicle was transported by trailer to Unanderra for an engineering assessment and a compliance certificate was issued.
At the start of 2023, he opened up his own motor mechanic workshop, which was called “Lil Niks Mechanical Repairs”.
On 10 July 2023 he attempted to start the engine and it omitted a very large backfire. He inspected it and stripped down the engine to determine the cause of the backfire. He pulled the manifold off (top section of engine). The manifold is held onto the engine block at the cylinder heads by multiple bolts. He pulled the supercharger off. He found:

the bolts to the inlet manifolds were loose

large gaps between the cylinder head and inlet manifold

four inlet manifold gaskets had been fitted between the inlet manifold and the cylinder head (instead of the usual two gaskets)

the gaskets were damaged as their bolt holes were a disproportionate size as they had been elongated, causing a distortion to the gaskets

a large leak at the inlet manifold

bent valves and incorrect (steel top) pistons used

there was no Weiand brand name on the supercharger and it had scratch marks on the blades

He submits that all of the above could only have occurred at the time of supply. If he had used the vehicle more in the beginning the issue would have become apparent earlier.
In July 2023, the applicant contacted the respondents to request a quote for additional engine parts to create a “boost” in the engine, including a “super charger”.
On 31 July 2023 the applicant sent an email to the respondents stating: “I forgot to add the inlet manifold gasket can you please add that to the quote”
On 31 July 2023 the respondents emailed to the applicant a quote dated 10 July 2023 (#EST91) for the additional parts, including many new gaskets.
The applicant said in his written submissions (p 7):

“I have purchased another set of gaskets and I managed to try and make it reseal temporarily. I have also looked into other inlet manifolds and tried a standard one (non-blower) and it sealed perfectly”.

On 2 August 2023 he paid $1,8751.9 for the extra parts.
He said in his oral evidence he did not end up using the additional parts he bought for enhanced performance.
On 10 October 2023 he notified the respondents by email of the above issues he had discovered in July 2023. The respondents wanted to see the engine, so he offered to take the engine to the respondents’ workshop in Albury, or to a mechanic of their choice in Bateman Bat, but the respondents ignored his phone calls and emails.
He says he “decided to fully investigate why the motor was defective. This could only be done by completely dissembling the engine.”
By completely disassembling the engine he discovered more faulty parts. He learnt that the manner in which the engine had been built was faulty with gaps and damaged inlet gaskets. The supercharger was also damaged.
He obtained a quote from an engine builder in Batemans Bay, Hi Tech Dynamic Balancing (Hi Tech) for the cost of parts and machine costs.
He has had the engine completely rebuilt by Hi Tech. When he bought a new gasket it fitted straight away.
He relies on video evidence of Hi Tech to corroborate the expert report of David Marston.
He also relies on the tax invoice for $10,055.10 (incl GST) issued by Hi-Tech on 15 May 2024 for parts ($5,386 excl GST) and machining ($3,755 excl GST) which he says he paid on 20 May 2024. On the invoice Hi Tech states:

“old manifold severely misaligned!! Machined new manifold to fit.”

While he may have got some dates wrong in his timeline, his expert’s opinion did not change. He submits he may have made a mistake in telling the respondents that the car had only driven 1,500kms in the five years since he had installed the new engine in April 2018. As at October 2023, the engine had still only travelled a limited amount of kilometres since installation. The fact it had driven 5,000km in five and a half years does not change the fact it was faulty upon being sold to him.

Applicant’s expert evidence of David Marston

The applicant relies on the expert report from Mr David Marston.
Mr Marston is an automotive master mechanic with over 40 years’ experience in assessing and repairing vehicles. He has experience in rebuilding automotive engines and gearboxes. Since 2017, he has been the National Chairman of the Australian Automobile Repairers Association.
Mr Marston supplied a report accompanied by photographs. He gave sworn evidence in support of his report via AVL.
He relies on instructions given to him by the applicant.
He subsequently filed an amended report as the instructions changed as to the chronology of events, but his conclusions did not change.
He did not inspect the vehicle or engine in situ, but inspected some engine components, including the inlet manifold gaskets.
In his opinion, the engine was not free from defects or fit for purpose as it had not been assembled with due care and skill.
Specifically, he says:

The initial machining of the motor was not “100% correct” and caused some bore damage to the engine.

It is “reasonable to conclude” that the “poor machining” also caused the large gaps observed between the inlet manifold and cylinder head. If the engine had been built with correctly machined surfaces there should be no gaps between the cylinder head and inlet manifold (paragraph 44).

The gaps led to air leaks, resulting in the engine back firing.

A correctly built engine will not backfire even on its initial start up.

In an (unsuccessful) attempt to reduce the gaps and cover up the poor machining and “assembly error”, during the building process, the respondents deliberately used two inlet manifold gaskets instead of the standard one gasket, to double the inlet manifold thickness and to try (unsuccessfully) to seal the inlet manifold to the cylinder head. The gaskets were too thick and in excess of the manufacturer’s recommended specifications for this type of engine, which specifies the gasket has a thickness of approximately 1.5mm.

The intake manifold gaskets used were the wrong size as their bolt holes did not align with the holes in the cylinder head and holes in the inlet manifold. Hence the bolt holes in the gaskets were cut, torn and stretched and elongated by using a sharp knife to force them to fit to the engine. The modified gaskets did not properly seal the inlet manifold to the cylinder head, allowing the air leaks.

The air leak issues would have been found by the respondents when the vehicle was Dyno tuned in 2017.

This demonstrates “standard and reasonable automotive” practices have not been followed and a deliberate attempt to cover up faults in the engine.

The supercharger (air pump) blades were damaged and the supplied ancillary equipment fitted to the engine was substandard or incorrectly fitted and had failed. The clamping forces applied to the gasket show a different supercharger had been put on the engine originally.

He cannot comment on the pistons.

He cannot establish an exact mismatch because he did not see the cylinder head.

Respondents’ evidence

Ms Righetti submitted as follows.
She and her husband, Mark Righetti are owners of the business which is based in Albury.
In 2017, they had a fully functioning machine work shop and a retail shop. Today they no longer operate the machine shop, but continue to build engines and operate a retail store. They have been in the business of supplying performance parts for the automotive industry for over 35 years.
They provided engine reconditioning services whereby they re-manufacture old engines and build brand new engines and sell engines. They purchase engine parts and assemble those parts to create an engine, sometimes to a customer’s specification, and sell the engine as a whole.
In 2017, they had a team of qualified engine builders/re-conditioners working for them.
When asked by the Tribunal as to whether they were manufacturers or suppliers, Ms Righetti said the business is not classed as a ‘manufacturer’ for tax purposes.
They sponsor various car shows, hot rod runs and car clubs.
In July 2017, the respondents received an inquiry from the applicant about an engine they had built that was advertised for sale on their website.
After correspondence between the parties, the applicant was happy to buy the engine and on 10 October 2017 he paid the respondents a deposit of $4,180.
The engine sold to the applicant by the respondents had not been custom built for the applicant. It was a pre-made brand new engine built by the respondents with brand new engine parts that was advertised for sale on the respondents’ website.
The work on the applicant’s engine was carried out by Paul Fox, a long-time employee of the respondents and qualified engine builder. Ms Righetti submitted that Mr Fox would not do anything to jeopardise the engine.
Before the applicant paid in full and collected the engine, the respondents ran the engine on the Dyno for two hours to observe a variety of rev ranges. The dyno tune process enables any potential oil leaks and other issues to be identified.
On 7 November 2017, Mr Fox sent an email to the applicant with a link to the Dyno Run video. The video does not show the supercharge with a “Weiand” logo as the applicant submits. This is because there was never a Weiand emblem on the supercharger as Weiand no longer fix their logo on their superchargers.
On 11 November 2017, the applicant paid the balance of $21,492 for the engine and attended the workshop to collect the engine which was in a box.
During the first year, the applicant wrote to the respondents expressing satisfaction with the engine.
In the following years, the applicant posted entries on Facebook showing his hot rod at car shows and being driven.
In July 2023, the applicant rang to inquire about purchasing upgraded performance parts from the respondents, such as charging pulleys, to increase the boost of the engine. He bought those parts on 2 August 2023, including manifold gaskets and says he carried out resealing works to the manifold and cylinder head. He did not inform the respondent there was a problem with the existing inlet manifold gaskets at this time. The respondents submit that the backfiring and gasket issues only arose after the applicant carried out these modifications and as a result he is responsible for any damage caused. Due to these modifications by the applicant, he is unable to show there was pre-existing damage to the original inlet manifold gasket in 2017.
Further, around this time, the applicant called into the respondents’ workshop and said he was happy with the engine.
It was not until three months later (on 10 October 2023) that the applicant informed the respondents of the problems with the gasket and threatened to involve his lawyers if the respondents did not come up with a solution. However he did not make clear what he wanted done.
On 10 October 2023, the respondents replied the same day and asked for an inspection.
Mark Righetti was overseas from late October 2023 to late December 2023, so he did not immediately respond to the applicant’s second email sent in late October 2023 concerning an inspection.
In the meantime, in November 2023, the applicant was taking the hot rod to shows and posting photos of the engine on Facebook with captions: “Crank it up at Batemans Bay” and “Send it till ya bend it.”
On 24 January 2024 the respondents sent an email to the applicant asking what he wanted and how they could help, but he did not respond. When asked at the Tribunal hearing on 28 March 2024 how they could assist or resolve the issue, the applicant merely responded: “throw me a figure”.
The respondents submit they “stand by every element of the engine build”.
The respondents were initially happy to assist the applicant and provide “cost price” parts.
However, there were “so many inconsistencies” in the applicant’s story. Ms Righetti said she was not sure what to believe anymore. His expert, Mr Marston has provided two versions of a report with different timelines of events and the first report was based on inaccurate information and instructions.
The backfiring could be due to any number of reasons, such as stale fuel and low battery voltage and lack of maintenance. The applicant has conceded he did not check the voltage or fuel.
The respondents submit there were two possible scenarios to explain what had occurred with the damaged gasket. One was that Mr Fox had intentionally used two gaskets instead of one. This is not unusual.
The respondents did not modify the gasket causing it to become distorted as Mr Marston says. The gasket was pre-drilled and came as part of a kit, which the respondent assembled.
Alternatively, the back firing has damaged the gaskets. Distortion to the gaskets is common when an engine has backfired, especially when the bolts are not being tightened. Mr Marston noted the manifold bolts were loose. The respondents’ warranty and instructions state that bolts should be checked and retightened after initial usage and at the 1,000 km service. There is no evidence the vehicle was serviced by the applicant.
It could be attributed to how the applicant drove the car. The applicant’s video he posted on Facebook shows him over revving the engine.
At the first hearing on 28 March 2024, the applicant was told by the Tribunal Member to cease any work he was carrying out on the vehicle, which he ignored.
The applicant initially said the repair work was done by a friend and he was only claiming the cost of parts. The only claim of damage is the inlet manifold gaskets. The extent of damages he is claiming far exceeds what could reasonably be caused by a single engine backfire.
The repairs have not been verified and there is no documentation for the machining work said to have been done by a third party. The cost of the parts has not been assessed by the expert. The invoices cover parts such as a carburettor and distributor that were not claimed to have been damaged in the expert report. Many other items invoiced are unrelated to the engine and should not form part of the claim (flex plate bolts, torque converter bolts, holey fuel regulator, NPT extensions, coil, coil bracket, ignition box, leads, collector gaskets, torque converter, fittings and hoses). Other parts are “basic serviceable parts” that should not be part of the claim (blower belt, oil and oil filter). Some components (such as bolts and studs) are reusable and need not have been replaced.
Some of the invoices are addressed to other customers. Some of the invoices are handwritten and difficult to read.
Because of the way the applicant’s story has changed, the respondents have been unable to identify the true cause of his complaints.
The respondents have not inspected the engine and do not wish to.
As to the allegation the supercharger is not a genuine Weiand part, the respondents say the supercharger never had a Weiand emblem on it when the engine was sold to the applicant and the applicant’s photo is of a different vehicle and not the photo of the engine on the dyno in 2017. The respondents also rely on an email from one of their suppliers, “Holley” dated 2 April 2024 confirming that their superchargers do not have a side logo anymore and they removed it “quite a few years ago”.

The letters of support from suppliers, Mr Paul Cox, General Manager of Precision International dated 1 October 2024 and Mr Glen Collett, Brand Manager of Rocket Industries Pty Ltd dated 13 August 2024 both attest to the professionalism of the respondents and the fact that the respondents only ever bought quality parts.

Jurisdiction under the Fair Trading Act NSW and the ACL (preliminary comments)

The Tribunal has jurisdiction under s 79J of the Fair Trading Act NSW 1987 (FTA) to hear and determine consumer claims brought by a “consumer” against a “supplier”, within three years of the cause of action first accruing: s 79L FTA.
By operation of s 28 of the FTA, Schedule 2 of the Competition and Consumer Act 2010 (Cth) applies in NSW as the ACL (NSW).
Part 3-2 of the ACL (NSW)confers on consumers acquiring goods or services various guarantees.
The separate jurisdictional issues of both the FTA and the ACL are discussed in more detail later in these Reasons.

Was the contract for the supply of goods or the provision of services or both?

It is alleged the respondents failed to comply with the guarantee as to acceptable quality required by s 54 ACL by supplying an alleged faulty engine and breach of the warranty in s 55 that the engine was not fit for a disclosed purpose.
It is also alleged the respondents undertook poor workmanship in the assembly of the engine. This is arguably in breach of the guarantee in s 60 ACL, which requires services are to be supplied with due care and skill.
Section 259 ACL sets out the various actions that can be taken against suppliers of goods and s 267 sets out the actions that can be taken against suppliers of services.
The damages which a consumer is entitled to when a supplier of goods and a supplier of services breaches an implied guarantee, are, to the extent they apply to the facts of this matter, the same. They include the loss and damage that it was reasonably foreseeable that the applicant would suffer as a result: ss 259(4) and 267(4) and all reasonable costs incurred by the consumer in having the failure remedied: ss 259(2)(b)(i) and 267(2)(b)(i).
However, it is not necessary to deal with the provisions regarding “services”. This is because the contract to sell the engine (which had been manufactured by the respondents) involved the provision of both goods and services. The sale of the “goods” was “a core part of the supply”. By reason of the definition of the supply of “goods” in ss 2 and 11 of the ACL, the whole of the transaction is properly characterised as a supply of goods: Australian Competition and Consumer Commission v Valve Corporation (No 3) (2016) 337 ALR 647; [2016] FCA 196 at [131]-[134]; Wilson v Winnicott [2021] NSWCATAP 211 at [77]-[99].
In any event, even if a breach of both s 54 and s 60 is found against the respondents, s 60 does not take the applicant’s case any further, as he would already have achieved his remedy of damages (if proven) in relation to the supply of goods and have no further loss. He is not entitled to be doubly compensated.
Further, the applicant has not sought a ‘refund and return’ remedy of goods, requiring him to “reject” the engine (which I have found he did not) and which is not an available remedy for breach of the service guarantees.
For the purposes of the available causes of action and remedies under the ACL, I have treated the respondents as suppliers of goods and not services.

Are the respondents suppliers or manufacturers or both?

Under the ACL, consumers can elect to bring a consumer guarantee claim concerning goods against the supplier, the manufacturer or both.
The appropriate remedy concerning goods, depends on the whether the respondents are characterised as a supplier or a manufacturer.
Section s 271 of the ACL permits the applicant to recover damages from a manufacturer where the guarantee in s 54 is not complied with.
The respondents submit they are not manufacturers. The applicant made no submission on this issue.
Again, it does not take the applicant’s case further as to how it is classified, as the same type of damages, for reasonably foreseeable loss or damage, may be recovered against a manufacturer under s 272(1)(b) ACL, as may be recovered against a supplier under s 259(4).
Where the distinction between supplier and manufacturer becomes relevant is the applicable time limitations against each for bringing the action.
In Sacks v Hammoud [2016] NSWCATAP 140 at [59], a case of a claim against a supplier for a failure to comply with a consumer guarantee (in that case, s 60), the Appeal Panel held that the cause of action first accrues under s 267(4) (and time begins to run) based on a factual finding of “when the alleged damage became known or could have become known with reasonable diligence.”
Another Appeal Panel held in Tang t/as Better Aquariums v Karatasoulis [2018] NSWCATAP 140 at [32] that the same principle would be applicable in the case of a claim against a manufacturer for a failure to comply with the guarantee under s 54 of the ACL. This view is supported by a consideration of s 273 of the ACL, which provides that an action against a manufacturer may be brought at any time within three years after the day on which the affected person first became aware, or ought reasonably to have become aware, that the guarantee has not been complied with (i.e., which is when there is knowledge of loss).
Whilst the respondents may no longer operate a machining workshop, they still build engines. In any event, I find they were a manufacturer at the time they made and sold the engine to the applicant.
Either way, if the problem with the gasket manifested itself later than 4 December 2020 (which I have found it did as set out further in these Reasons), then the jurisdictional issue in s 79L will be satisfied.
I find that in 2017 at the time of sale of the engine to the applicant, the respondents were both a manufacturer and a supplier of engines.
However, for the purposes of the available causes of action and remedies under the ACL, I will treat the respondents as suppliers of goods, not manufacturers.
I make factual findings concerning time limits and jurisdiction below.

Guarantee as to acceptable quality – s 54 ACL

Under s 54(1) ACL, 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.
In relation to goods being of acceptable quality, s54(2) provides:

(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).

The test for these qualities is an objective one. It is not what the applicant believes, but what a “reasonable consumer” fully acquainted with the state and condition of the goods (including any hidden defects) would regard as acceptable quality having regard to the matters in s 54(3): the nature of the goods, the price paid for them, any statements made about the goods in advertising materials, any representations made about the goods by the supplier or manufacturer of the goods and any other relevant factors.

Guarantee as to fitness for purpose - s 55 ACL

In relation to goods being fit for a specific purpose, s 55(1) provides “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”.

Cause of action against suppliers of goods - ss 259-263 ACL

Where a finding has been made that a supplier has breached s 54 or s 55, a consumer may bring an action against that supplier under s 259 of the ACL.
In Barbour v Autosports Five Dock Pty Ltd [2020] NSWCATAP 141 at [58] the Appeal Panel said:

“There are three potential causes of action under s 259 relevant to the facts of this appeal arising from breaches of these guarantees.”

Those three potential causes of action under s 259 are dependent on the type of breach and whether it is a ‘major’ or minor failure of compliance.
Section 259(2) provides:

(2) If the failure to comply with the guarantee can be remedied and is not a major failure:
(a) the consumer may require the supplier to remedy the failure within a reasonable time; or
(b) if such a requirement is made of the supplier but the supplier refuses or fails to comply with the requirement, or fails to comply with the requirement within a reasonable time—the consumer may:
(i) otherwise have the failure remedied and, by action against the supplier, recover all reasonable costs incurred by the consumer in having the failure so remedied; or
(ii) subject to section 262, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection.

In other words, under s 259(2), a supplier is liable to a consumer to remedy a (minor) failure to comply with a guarantee of acceptable quality within a reasonable time: s 259(2)(a), or for the compensation (reasonable costs incurred by the applicant in having the failure remedied) where the supplier refuses or fails to comply with the requirement to remedy the (minor) failure: s 259(2)(b)(i), or reject the goods under s 259(2)(b)(ii) within the rejection period and claim a refund under s 263(4)(a).
Section 261 sets out the ways that a supplier may remedy a minor non-compliance, including by repairing, replacing or refunding the purchase price. A consumer may make the request, but it is the supplier who is entitled to choose the means of remedying the (minor) breach.
Secondly, s 259(3) provides as follows:

(3) If the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may:
(a) subject to section 262, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection; or
(b) by action against the supplier, recover compensation for any reduction in the value of the goods below the price paid or payable by the consumer for the goods.

In other words, if the failure to comply with the guarantee cannot be remedied, or is a major failure (as defined in s 260), the consumer may reject the goods (s 259(3)(a)). If the consumer gives notice he rejects the goods within the rejection period (s 262), the supplier must, in accordance with an election made by the consumer, refund any money paid by the consumer for the goods (s 263(4)(a)). In the alternative, if the failure to comply with the guarantee cannot be remedied or is a major failure, the applicant can claim “reduction in value” damages under s 259(3)(b).
Section 260 defines a “major failure”.
Section 262(1) sets out when a consumer may not 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; or
(b)  the goods have been lost, destroyed or disposed of by the consumer; or
(c)  the goods were damaged after being delivered to the consumer for reasons not related to their state or condition at the time of supply; or
(d)  the goods have been attached to, or incorporated in, any real or personal property and they cannot be detached or isolated without damaging them.

Section 262(2) provides guidance as to how the rejection period is determined.
Thirdly and in addition to either s 259(2) or 259(3) and regardless of whether the failure is “minor” or “major”, and regardless of whether the goods have been rejected, there is a stand-alone right to damages under 259(4), however it must be reasonably foreseeable to the respondents that the applicant would incur such loss or damage as a result of the failure.

What is the applicant’s specific cause of action under s 259? – s 259(2) or s 259(3) or s 259(4)?

The applicant did not specify under which limb of s 259 he brought his claim.
In essence, the applicant’s claim is to recover the costs he has spent buying replacement engine parts.

Section 259(3)

The applicant did not submit at the hearing that the failure to comply with the guarantee as to acceptable quality was a “major failure” within the meaning of s 260, nor do I find that he gave a notice of rejection of the engine under s 262 and sought to return the engine under s 263(2) and obtain a refund under s 263(4)(a).
In any event, he may not have been entitled to reject the engine if s 262(1)(d) applies and the engine, having been attached to, or incorporated in, the hot rod vehicle, could not be detached or isolated without damaging the engine. I have not had to make a determination on this issue.
Nor did the applicant advance evidence in respect of s 259(3)(b) going to the loss of value of the engine.
In the circumstances I find s 259(3) is not engaged.

Section 259(2)

Nor do I find that the elements of s 259(2) are made out. Section 259(2) assumes a finding that the respondents were required to remedy the failure with the engine within a reasonable time and that the respondents refused to comply.
I find the applicant made no specific request to the respondents as to how he envisaged the failure to comply should be remedied by them. As mentioned the applicant did not reject the engine. Further, he did not require the respondent to repair the engine or pay him compensation. Instead, in his initial notification of the discovered defect he made reference to engaging solicitors. He had already engaged an expert.
I also find that upon notification of the defects on 10 October 2023, the respondents immediately responded, the same day, by email to the effect they were ready, willing and able to inspect the engine and carry out their own testing.
The respondents were not afforded the opportunity to take their own remedial action on issues with the engine which arose six years after its delivery to the applicant.
In late January the respondents sought “clarity on your expectation from Engine Master Australia in this matter”. They did not receive a response.
In the circumstances, it cannot be said that the respondent supplier ‘refused’ or ‘failed to comply’ with a consumer’s request within the meaning of s 259(2)(b). Therefore, the applicant has no remedy under s 259(2)(b)(i) of the ACL for recovery of his ‘reasonable costs’ – see Elivir Halilovic v Prestige Motor Sport Sydney Pty Ltd trading as Prestige Motor Haus Sydney [2018] NSWCATCD 4 at [90-91]
For all the above reasons, I find section s 259(2) is not engaged.

Section 259(4)

In circumstances where the applicant had not rejected the engine, it is arguably reasonably foreseeable that the applicant would have to bear the cost of repairing it. Arguably, the repair costs are a reasonably foreseeable loss which can be the subject of an order for damages under s 259(4) of the ACL: My Pool Safety Inspector Pty Ltd v MCM Sutherland Pty Ltd [2024] NSWCATAP 58 at [57-60].
I have therefore treated the action as one brought under s 259(4).

Misleading and deceptive conduct - s18

Section 18 of the ACL prohibits misleading or deceptive conduct in trade or commerce.
The application and the applicant’s written submissions did not refer to s 18 (or s 29, which prohibits false or misleading representations about goods or services). However, the facts of the matter give rise to the issue that by their actions the respondents engaged in such conduct, namely suppling a used supercharger in lieu of a new one and concealing poor workmanship by using four gaskets instead of two.
To the extent necessary, s 53(1) of the NCAT Act allows the Tribunal, at any stage of the proceedings and on such terms as the Tribunal thinks fit, to amend an application if its considers the amendment “to be necessary in the interests of justice”. I make an amendment to this effect. I see no prejudice to the respondents as the same set of facts and allegations are relevant to both s 54 and s 18 and have been canvassed by the parties at this hearing and in written `submission.
In proceeding on the above basis and attempting to ascertain the relevant causes of action, I have had regard to the fact the applicant was not legally represented and the requirement for the Tribunal to act “with as little formality as the circumstances of the case permit and according to … the substantial merits of the case without regard to technicalities or legal forms” under s 38(4) of the Civil and Administrative Tribunal Act (NSW) 2013 (NCAT Act) and also Moloney v Taylor [2016] NSWCA 199 at [30] – [31].
A person who suffers loss or damage by reason of a breach of s 18 may recover damages for loss caused by the misleading conduct under ACL s 236.
The point may be moot, as if the applicant is successful under s 54, then any potential damages recoverable under s 18 does not take the applicant’s case any further.

Jurisdiction under the Fair Trading Act NSW and ACL

As mentioned, the Tribunal has jurisdiction to hear and determine consumer claims brought by a consumer whereby a supplier supplies goods or services to a consumer.
A “consumer claim” is defined in s 79E as:

79E Meaning of “consumer claim” (cf CC Act 1998, s 3A)
(1) For the purposes of this Part, a consumer claim means a claim by a consumer, for one or more of the following remedies, that arises from a supply of goods or services by a supplier to the consumer (whether or not under a contract) or that arises under a contract that is collateral to a contract for the supply of goods or services—
(a) the payment of a specified sum of money,
(b) the supply of specified services,
(c) relief from payment of a specified sum of money,
(d) the delivery, return or replacement of specified goods or goods of a specified description.
(2) For the avoidance of doubt, a reference in this Part to a consumer claim includes a reference to a claim by a consumer against a supplier (for example, a manufacturer or wholesaler) who is not the direct supplier of goods or services to the consumer if the claim arises from or in connection with the supply of those goods or services by the direct supplier to the consumer.

A “consumer” is defined in s 79D, relevantly, as follows:

consumer means any of the following persons or bodies to whom or to which a supplier has supplied, or agreed to supply, goods or services (whether or not under a contract), or with whom or with which a supplier has entered into a contract that is collateral to a contract for the supply of goods or services—
(a) a natural person,
(b) ...

A “supplier” is defined in Section 79D as follows:

supplier means a person who, in the course of carrying on (or purporting to carry on) a business, supplies goods or services

The term “supply” is defined in section 79G, relevantly, as follows:

79G Meaning of “supply” (cf CC Act 1998, s 3 (1) (definition of “supply”) and s 3 (2))
(1) For the purposes of this Part, a reference to the supply of goods includes a reference to any of the following—
(a) supplying goods by way of sale, exchange, lease, hire or hire-purchase,
(b) resupplying goods,
(c) agreeing to supply goods,
(d) supplying goods together with services

I am satisfied that the applicant is a consumer within the meaning of s 79D as he is an individual. His claim against the respondents is a “consumer claim” as defined by s 79E(1)(a) as the applicant seeks a specified sum of money and the claim relates to a “supply” of “goods” by a “supplier” of goods in the course of the respondents carrying on a business: ss 79G(1)(a) and 79D. The engine is a “good” within the meaning of s 79D as it is a “tangible thing”. The respondents are direct “suppliers” as they have sold goods to the applicant.
And although I am not treating the respondents as such, under s 79E(2), a “consumer claim” includes a claim by a “consumer” against a supplier who is not the direct supplier, such as, relevantly, a manufacturer of goods.

The claim falls within the monetary limit in 79S and the contract has been made in New South Wales to satisfy s 79K.
Given the engine acquired by the applicant was purchased under the monetary threshold in s 3 ACL, I also find the applicant is a “consumer” within the meaning of s 3 of the ACL and the respondents are both “suppliers” of the engine within the meaning of s 2 ACL as they have sold the engine and “manufacturers” of the engine within the meaning of s 7(1)(a) of the ACL, which states that a manufacturer includes a person who grows, extracts, produces, processes or assembles goods. Under s 3(10) ACL an applicant is presumed to be a consumer unless the respondents prove otherwise and they have not made a submission to this effect.
In determining a consumer claim, the Tribunal can make orders under s 79N, relevantly, including a money order under s 79N(a).
When the Tribunal makes an order in favour of the claimant in a consumer claim for which the Tribunal has jurisdiction under the FTA, regard must be had to s 79U which provides:

1) When making any orders under this Division, the Tribunal must be satisfied that the orders will be fair and equitable to all the parties to the claim.

Subject to the limitation issues under the FTA I have raised immediately below, I find the applicant’s claim is a consumer claim within the meaning of the FTA with the respondents potentially liable to the applicant under the ACL.

Limitation issues - section 79L FTA

The Tribunal’s jurisdiction to hear a consumer claim is governed by s 79L of the FTA which provides that:

(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,
(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.

Given the engine was bought on 11 November 2017 and the claim was brought on 4 December 2023, more than three years later, the limitation issue is a live issue as to whether the Tribunal had jurisdiction to hear the claim.
The relevant time period for the Local Court of NSW in relation to ACL consumer guarantee claims, whether the transaction was a supply of goods or services, is six years. Therefore such a claim was required to be made by 11 November 2023. These problems would arguably still confront the applicant if he commenced proceedings against the respondents in that Court.

When does a cause of action first accrue?

A cause of action “first accrues” when facts which constitute the elements of the relevant cause of action crystallise or combine so that all the elements necessary to entitle a person to make a consumer claim are present: Sacks v Hammoud [2016] NSWCATAP 225 at [34]. In Cairns v AHG Newcastle Pty Ltd [2020] NSWCATAP 103, the Appeal Panel said at [28], in the context of s 79L FTA, that the “cause of action giving rise to the claim” refers to the set of facts which support a right to an order by the Tribunal.

What are the elements of the cause of action under s 259(4)?

Section 259(4) states:

The consumer may, by action against the supplier, recover damages for any loss or damage suffered by the consumer because of the failure to comply with the guarantee if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure.

The elements are that:

the applicant must be a ‘consumer’ within the meaning of s 3 ACL (which I have already found to be the case).

There must be a failure to comply with ss 54 or 55.

an award of damages is subject to factual findings being made about it being reasonably foreseeable to the respondents the loss would result from the breach

the loss is not caused by events independent of human control under s 259(5).

When does a cause of action first accrue under s 259(4)?

Relevant authorities

In Barbour, the Appeal Panel said at [65] that the statutory cause of action for damages under s 259(4) ACL (and s 259(3)(b)) is similar to a claim for damages in respect of misleading and deceptive conduct.
Misleading and deceptive conduct was considered by the High Court in Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514.The majority held at [525] that a cause of action for misleading and deceptive conduct accrues when loss and damage arising from the contravention is first sustained.
This view was accepted by the Appeal Panel in Sacks when considering when an action “first accrues” under s 267(4) of the ACL arising from a failure to comply with the guarantee as to due care and skill contained in s 60 of the ACL. It observed that a cause of action under 267(4) has two discrete elements: a failure to comply with the guarantee and suffering damage and loss as a result of that failure. It concluded at [56] that a cause of action under s 267(4) does not accrue until loss or damage is sustained because of the alleged failure to comply.
Knowledge of the legal implications of the known facts is not an additional fact which forms part of a cause of action - Do Carmo v Ford Excavations Pty Ltd [1984] HCA 17; (1984) 154 CLR 234 at [245].
So, once a cause of action accrues, time begins to run and it does not matter that the applicant was ignorant of the true position (i.e. aware of the loss): Winnote Pty Limited (in liq) v Page [2006] NSWCA 287 at [40].
There are exceptions however to the general rule that loss arises immediately upon damage occurring whether or not the breach was discovered by the applicant. In some cases, a cause of action will not accrue (loss or damage is not sustained) until the defect becomes manifest, or could with reasonable diligence be discovered. Such cases involve economic loss arising from negligent construction of a building and economic loss arising from misleading and deceptive conduct.
But the majority of the High Court in Hawkins v Clayton (1988) 164 CLR 537: (see, as per Deane J in Wardley at page 540.3) rejected the submission that there be a general qualification that time does not commence to run until the damage is discovered by the plaintiff or could on reasonable inquiry have been discovered in claims in negligence for economic loss.
As to claims in negligence for latent building defects, McHugh J in Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515, said in relation to the findings of Deane J in Sutherland Shire Council v Heyman [1985] HCA 41; (1985) 157 CLR 424:

[56]….. After buying the house, the owners were forced to expend money to repair cracking and other problems resulting from faulty foundations….Deane J held that it was economic, not physical, damage. He held that, as a result of the defective foundations, the owners suffered pure economic loss upon the market value of the house falling when the defect was “first known or manifest”. By “manifest”, Deane J meant “discoverable by reasonable diligence”. The view of Deane J as to the nature of the damage has prevailed. It is economic loss, not physical damage.

As to cases involving economic loss caused by misleading and deceptive conduct, such a category of case was recognised by Bergin CJ (in Eq) in McBride v ChristiesAustralia [2014] NSWSC 1729 at [217-228] in a case involving a forged painting. The plaintiff bought the painting at auction in 2000. Ten years later, when she was preparing to sell it, she discovered that it was a forgery. The auction house pleaded a limitation defence but it was determined that time did not run from the date of purchase, but when the fake was discovered.
It is therefore necessary to determine when the applicant first suffered this type of damage under s 259(4), which is done by reference to “the measure of damages that apply”. The cause of action therefore accrues “when measurable damage is first suffered even though further damage continues to accrue”: D’Agostino v Anderson [2012] NSWCA 443 at [7] and Sacks at [57] citing Wardley at [526-527].
In Wardley at [526-527], the majority found with cases concerning economic loss, there has to be immediate actual loss of a measurable kind and prospective loss is not enough as while a plaintiff may suffer disadvantage immediately upon entering an agreement induced by a misrepresentation, “to compel a plaintiff to institute proceedings before the existence of his or her loss is ascertained or ascertainable would be unjust”.
However, in Wilson v Winnicott [2021] NSWCATAP 211 at [30, 57], the Appeal Panel said the decision in Sacks is not authority for the proposition that all causes of action under s 267(4) of the ACL (irrespective of the type of loss suffered) accrue when the alleged damage became known or could have become known with reasonable diligence. It said Sacks is limited to latent defect building cases and the test for when the cause of action accrues in other cases in negligence remained when damage is suffered, irrespective of whether the applicant is aware of it.
Here, the applicant made his application in 4 December 2023. To be within the time limits of s 79L FTA, he must first have suffered measurable loss not earlier than 4 December 2020.
There was no limitation defence raised by the respondents, except for submitting the 12 month warranty on the engine had expired. They did not submit the alleged loss or damage had been suffered immediately upon purchase of the engine in 2017. In fact, they submitted the opposite, that any alleged loss came later and was not caused by them, but by the applicant’s own conduct and misuse of the vehicle and engine. Under s 79H FTA a person is presumed to be a consumer unless the contrary is proved.
By analogy to a claim for misleading and deceptive conduct, the applicant’s claim is for economic loss for a devalued or damaged asset that he says was not apparent until July 2023 because it was a “hidden” defect, though he bought it 6 years earlier.
Applying the principles in McBride and Sacks, no (economic) loss or damage is sustained until the defect is actually discovered or becomes manifest, or could with reasonable diligence be discovered as it is only then that a diminution in value or other consequential loss (for example, incurring expense), eventuates: see Upton v Martin & Stein Antiques Pty Ltd [2016] NSWCATAP 228 at [49] and [54].

Findings - limitations

The question therefore becomes whether the alleged damage caused by the respondents’ breach became known to the applicant, or could have become known with reasonable diligence before 4 December 2020: Little v Khoury T/As GAS-250 Restorations [2018] NSWCATCD 47 at [26].
The applicant has said that he first became aware of the seriousness of the issue and faulty parts being used when he “stripped down” the engine in July 2023.
However, there was evidence which showed the problem with the engine manifested itself earlier than July 2023.
On the applicant’s own evidence, the engine was misfiring from April 2018 when he installed it.
This is supported by the evidence of the applicant’s expert, Mr Marston who said at paragraph 21(j) that he was “instructed… this engine has always had problems starting since its initial start-up. The engine always coughs/splutters, being very difficult to start from day of installation when it backfired.”
The applicant also said he detected an oil leak in April 2018.
Arguably these issues should have put the applicant on notice, even more so because the applicant is a mechanic.
The applicant notified the respondents of the leak but says he did not receive a response. He says he let the issue go and continued to drive the vehicle. He was able to fix the leak himself.
However, whilst the applicant had expertise in motor vehicle repairs, the detection was not immediately apparent and ultimately required a lot of work to pinpoint. The gaskets are not visible from the external engine. The applicant removed a lot of components, such as the supercharger and manifold before he discovered the crux of the problem, being the faulty machining, the gaps in the cylinder head and inlet manifold and damaged manifold gaskets.
The fact that the defects were hidden and not easily detected is supported by the fact the vehicle passed an independent road safety assessment in August 2020.
The applicant’s beliefs were confirmed when he instructed Mr Marston to prepare a report on 25 September 2023. He subsequently obtained the expert report that stated the engine was not what he had thought he was purchasing.
I find that the cause of action under s 259(4) did not accrue and no such loss eventuated until, at the earliest July 2023 when the applicant discovered the faulty gaskets.
In these circumstances, I am satisfied that the proceedings were commenced within 3 years from when “the cause of action giving rise to the claim first accrued” as that expression is used in s 79L(1)(a) of the FTA. Consequently, the Tribunal had jurisdiction to determine this dispute.

Action for misleading and deceptive conduct

Section 18 provides:

18 Misleading or deceptive conduct
(1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
…

Section 236 provides:

Actions for damages
(1)  If:
(a)  a person (the claimant ) suffers loss or damage because of the conduct of another person; and
(b)  the conduct contravened a provision of Chapter  2 or 3;
the claimant may recover the amount of the loss or damage by action against that other person, or against any person involved in the contravention.
(2)  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.

What are the elements of the cause of action under s 236?

To establish a cause of action under s 236 in respect of an alleged contravention of s 18, the applicant must relevantly prove:

the respondents engaged in the alleged conduct;

the conduct was in the course of trade or commerce: s 18(1);

the conduct was false or misleading or was likely to mislead or deceive: s 18(2);

the applicant suffered loss or damage “because of” that conduct: s 236(1)(a).

The action does not arise unless and until loss or damage is suffered. Hence, the cause of action first accrues within the meaning of s 236(2) ACL and s 79L of the FTA when the requirement that loss and damage be suffered is first satisfied.

When did the applicant’s cause of action first accrue under s 236?

For the same reasons as for s 259(4), I find the cause of action under s 236 for misleading and deceptive conduct did not accrue until the applicant discovered the faulty gaskets in July 2023. I find the requirements under s 79L are met.

Section 54 – legal principles

Under s 54, if the engine does not meet any one of the criteria in s 54(2) at the point of sale, a breach is established, subject to any defences.
The guarantee under s 54 applies at the time the goods are supplied (which is 11 November 2017): Capic v Ford Motor Company of Australia Pty Ltd [2021] FCA 715 at [606], informed by what is known of their subsequent condition and by what it was reasonable to expect from the type of goods in issue: see generally, Medtel Pty Ltd v Courtney [2003] FCAFC 51 per Moore J at [40], Branson J at [70], and Jacobson J agreeing with Branson J at [81].

Defences available to supplier

Goods will not fail to be of acceptable quality if the supplier brought the relevant defect to the attention of the consumer before they were supplied: s 54(4), or if it is conduct by the consumer that causes the goods to become of unacceptable quality: s 54(6), or if the defect could have been discovered by the consumer upon reasonable examination: s 54(7).

Section 18 - legal principles

The applicant must show he relied on the misleading conduct or omission. As made clear in Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31; 110 ALR 608, the fact that no positive statement was made does not preclude a finding of misleading and deceptive conduct causing damage. Silence may itself constitute such conduct.
The wrongful conduct need not be the sole cause of the loss.
Under the Commonwealth ACL (s 137B of the Competition and Consumer Act 2010 (Cth)), damages may be reduced if the loss has been caused partly by the applicant failing to take reasonable care. There will be no reduction if the respondents have acted with intent or fraudulently.
Even if the s 137B does not apply to the NSW ACL (see Curtis v Potter & Co Pty Ltd t/as The Africa Safari Co [2016] NSWCATAP 196 at [59-60]), it may still be that any contributory negligence by the applicant can still be taken into account by the Tribunal in light of s 74(3) of the FTA, which provides a discretion as to the award for damages to be made. This subsection provides:

(3) The Tribunal may decide the matter of whether a person has suffered loss or damage because of the conduct of another person that constitutes a local contravention or a contravention of Chapter 2 or 3 of the ACL if that matter arises in connection with another matter the subject of proceedings in the Tribunal. In deciding the matter of loss or damage, the Tribunal may award such sum, and make such ancillary orders, as it thinks fit.

Findings

Was there a breach of s 54?

The onus is on the applicant to prove a breach and loss. The standard of proof required is on the balance of probabilities.
The standard of acceptable quality is the objective standard of a reasonable consumer fully acquainted with the state and condition of the goods including any hidden defects. The standard of acceptable quality is not absolute or a standard of perfection. It is elastic and depends on the circumstances of each case.
There was expert opinion to the effect that as a result of machining defects and modified parts during the assembly process, the engine was not free from defects or fit for purpose. The faulty workmanship caused the backfiring and leak.
Refuting this, the respondents says the backfire was caused by poor maintenance and misuse and the backfire caused the gasket distortion.
Whilst Mr Marston, the applicant’s expert has not seen the vehicle or engine, but inspected some engine components, such as the gaskets, I found his evidence carried significant weight. It is independent, not self-serving and he has experience in rebuilding automotive engines.
Apart from submissions from the respondents, they had not filed any independent expert evidence to refute the opinions of Mr Marston.
The respondents submit that at the time of the applicant’s engine build, “our engine building team consisted of staff members each with 20 to 45 years’ experience in performance engines… which must be built with the utmost precision.” However, the respondents did not put forward any evidence from the machinist and employee, Mr Paul Fox, who is said to have carried out the work. When asked why Mr Fox was not present or why he had not put on a statement or affidavit addressing the concerns and allegations, Ms Righetti said he did not need to.
As to the number, type and thickness of inlet manifold gaskets used, Mr Marston says the recommended thickness is 1.5mm and the existing gaskets were double that size. It is not in dispute the respondents used four gaskets instead of two. I accept that this was not in keeping with recommended procedure for the installation of inlet manifold gaskets.
I find on balance that the reason four were used was to attempt to fix up the gaps between the cylinder and manifold.
It is not in dispute the gasket bolt holes have been distorted. Whilst I note that the installation instructions for intake manifold gaskets allow “engine builders to trim the gasket for exact fit on modified ports,” I am persuaded by the evidence of Mr Marston, and I find that on the balance of probabilities, that the holes were intentionally cut in the assembly process in order to force the gaskets to fit and to conceal poor workmanship. I am persuaded by the evidence of Mr Marston that this has caused the gasket damage.

I am persuaded by Mr Marston’s expert opinion that the engine’s large backfire in July 2023 was due to the gaps between the manifold and cylinder, which allowed air leaks causing a backfire.
I have watched the (undated) video evidence submitted by the applicant on a USB stick. It is taken by an unidentified male who the applicant in his oral evidence said was from Hi-Tech Engine Balancing. However I cannot be sure of his identity and qualifications. The video which is accompanied by commentary from the male, purports to shows gaps between the cylinder and manifold gasket. However, given its provenance is unknown, I do not attach as much weight to the video as I do to the expert report.

Defences to s 54

I reject the respondents’ submissions directed at liability. In particular, I am not satisfied that the evidence supports a conclusion that the use of the vehicle by the applicant caused the problems with the engine or affected its durability, or that any of: non-servicing of the vehicle, not tightening the manifold bolts, stale fuel or lack of maintenance of the vehicle, amounted to a failure to take reasonable steps to avoid the quality of the engine becoming unacceptable. I am of the view that even if the facts relied upon to support the respondents’ submissions occurred, they would not result in the engine being of acceptable quality.
Further, even if prior to the purchase, the engine didn’t backfire when being tested on the Dyno tuner or demonstrate any oil leaks or air leaks, it does not follow that the engine was of acceptable quality. This is because when it was sold to the applicant in November 2017, in Mr Marton’s opinion, the respondents had intentionally and deliberately attempted to cover up faults in the engine. Mr Marston says (paragraph 54): “The work was performed by the repairer prior to the engine being supplied to Mr Celovic. I am of the opinion that this clearly demonstrates that the repair[er] knew there was a fault with the motor.”
Whether the respondents were aware or not that the engine was faulty is irrelevant to establishing a breach of s 54. In Capic at [53] Perram J said:

In an ordinary claim that goods are not of acceptable quality the question of why they are such is irrelevant. For example, if I buy a kettle and it does not work, it does not matter why it does not work. It is not of acceptable quality simply because it does not work. The applicant in such a case has no need to prove its design or componentry deficient, just that it does not work.

The respondents’ knowledge and concealment may go to establishing a breach of s 18 (discussed below).
Further, the fact the applicant made public comments on social media and to the respondents that he was satisfied with the engine, also does not mean that the engine was of acceptable quality in 2017.
The fact that the vehicle drove 5,000kms and not 1,500kms in the five years since the engine’s installation, also does not mean that the engine was of acceptable quality in 2017.
Nor do I accept that the applicant by installing the engine himself has caused a breach of s 54. I accept it was installed to the manufacturer’s recommended specifications, as Mr Marston has stated.
The fact that the applicant purchased upgraded performance parts in August 2023, including inlet manifold gaskets in an attempt to reseal the cylinder to the inlet manifold after the backfiring occurred, did not in my view cause the engine to be of unacceptable quality. Mr Marston does not address the purchase of the additional parts and the applicant’s modifications and enhancements to the engine’s boost and performance.
Ultimately, I find that the engine purchased by the applicant was not of acceptable quality because it did not satisfy all of the criteria in s 54(2) of the ACL. At the time of sale, the engine was not fit for all purposes for which goods of that kind are commonly supplied and was not free from defects, 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 s 54(3).
In reaching this conclusion I have considered the relevant matters in s 54(3) of the ACL. The purchase price of the engine was high, being over $23,000. It was represented by the respondents in the Dyno tune video before sale as having no faults. Contrary to this, the applicant’s expert evidence is (and I have found) that the engine’s assembly and machining was poor, parts did not seal allowing air leaks and backfiring and inappropriate parts were used and were damaged in the assembly process.
I find that a reasonable consumer fully acquainted with the state and condition of the engine (including any hidden defects), would not regard it as acceptable having regard to the matters in s 54(3).
I find the respondents did not comply with the consumer guarantee in s 54 of the ACL.

The supercharger issue

The applicant has alleged the supercharger is not a genuine and new part as it does not have a Weiand emblem but when the engine was dyno tested at the time of purchase, it had the Weiand emblem. The applicant relies on photos of the engine he says he obtained from the respondents whilst it was being dyno tuned.
The respondents say the engine never had a Weiand emblem and the applicant has provided a photo of a different engine.
The photos are said to be from November 2017 (pp 42-43) but they are undated and it is unclear who took them. In any event, the photos are grainy and unclear and I cannot see an emblem on the engine in either photo.
Further, the applicant submits the blower blades on the supercharger are damaged (paragraph 46). Mr Marston speculates this occurred during the dyno process (paragraph 59). Mr Marston says the damaged supercharger (paragraph 47) “indicates that the supplied ancillary equipment fitted to the engine by the repairer, was substandard or incorrectly fitted and had failed.”
I find on the balance of probabilities there is insufficient evidence that the supercharger is not an original part. Mr Marston has not inspected the supercharger but relies on photos only. Mr Marston has not properly identified what “ancillary equipment” is substandard or has been incorrectly fitted or has failed. Any damage to the supercharger blade I find to be the result of reasonable wear and tear over six years. I find the applicant has not discharged his onus of proof and I dismiss any claim concerning the supercharger.

Were the damages reasonably foreseeable?

The applicant is entitled to be compensated for the breach of s 54 (it is not necessary for me to consider s 55 as the damage is the same).
Under s259(4) the applicant may, by action against the supplier, recover damages for any loss or damage suffered by the consumer because of the failure to comply with the guarantee if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure.
The applicant is only entitled to recover the kind or type of loss which was reasonably foreseeable to result from the breach. In order to be reasonably foreseeable, the kind or type of loss likely to be reasonably foreseeable is when it is within the knowledge of the respondents.
I am satisfied that the reasonably foreseeable loss suffered by the applicant is the cost of rectifying the engine for the following reasons.
The respondents provided no evidence in support of the claim that the engine could be repaired and the cost of those repairs, despite being given the opportunity to put on further evidence after the hearing in response to the applicant’s late service of invoices. It was open to the respondents to provide evidence about the reasonable cost of repairs, but they elected not to give the Tribunal an alternative quote. They chose not to inspect the engine when the Tribunal offered them that opportunity. Nor did the respondents provide any evidence to support a conclusion that repairing the engine was not a reasonable step to take. In effect, the evidence before the Tribunal at the hearing was that the engine could be repaired, but that the respondents were not prepared to repair the engine or pay the cost of doing so. They had been willing to assist with cost price parts in October 2023 when first notified, but had become frustrated with the changing information and lack of specific requests from the applicant as to what he wanted.
In circumstances where the applicant had not rejected the engine, I find it is reasonably foreseeable that the applicant would have to bear the cost of repairing it (if proven). The repair cost are a reasonably foreseeable loss which can be the subject of an order for damages under s 259(4).

Assessment of damages/ mitigation – claim for 29 engine parts - $20,577.28

The difficulty for the Tribunal in assessing and awarding an amount for damages is that no explanation is provided as to how the engine should be fixed. Mr Marston does not address rectification. Nor has he priced and assessed the applicant’s invoices totalling $20,577.28 for 29 individual parts and made comment on proper costing.
The respondents submit the only claim of damage is the inlet manifold gaskets and the extent of damages the applicant is claiming far exceeds what could reasonably be caused by a single engine backfire.
The respondents also submit the applicant did not notify them of the issues upon discovery on 10 July 2023, but in fact ordered more parts from them and continued to drive the vehicle for a further three months, thereby further compromising the engine.
Damages cannot be recovered for any loss which could have been prevented by reasonable mitigation action taken by the injured party. Further, damages cannot be too remote.
I find it strange that on the very same day the engine omitted a large backfire and the applicant began “stripping the engine down” and discovered the faulty workmanship (which was 10 July 2023) that the applicant contacted the respondent to buy extra parts for the engine but did not inform the respondents of the defects he had that day found. I find that by not immediately notifying the respondents upon discovery of the defect and continuing to drive the vehicle in its compromised state and taking it to car shows during September 2023 and November 2023 as the applicant’s Facebook videos and photos suggest, the applicant has failed to mitigate his losses and potentially caused further damage to the vehicle.
Mr Marston does not address the issue of the applicant inquiring about and purchasing extra parts and carrying out works on the engine during July 2023 to November 2023, presumably because the applicant did not inform him. On this note, I am not entirely satisfied that the applicant has been truthful and forthcoming at all times, which in my view has affected his credit.
I also find that the evidence of what has actually been repaired is flimsy and insufficient. It consists of invoices totalling $20,577.28, some of which are handwritten and difficult to read. One proof of purchase is merely a text message relating to obtaining a carburettor and distributor with instructions to pay $1,000 to a person named Richard Barilla. There is no evidence to suggest a new carburettor and distributor are necessary or the qualifications of Mr Barilla. I would be reluctant to allow this cost.
The main invoice from Hi-Tech Dynamic Engine Balancing at Malua Bay is for $10,055.10. The tax invoice #0097 is dated 15 May 2024 and is written in longhand and is very difficult to read. It appears to allocate $5,836 for parts and $3,755 for machining.
The applicant’s evidence was that the engine has been completely rebuilt by a friend and engine builder. The applicant said he paid for the labour himself and was only asking the Tribunal for an order the respondent pay for parts. It is therefore not clear why an apparent amount of $3,755 for machining carried out by Hi-Tech has been included as part of the applicant’s Tribunal claim. There is no ABN on the Hi Tech invoice nor is it signed by any individual. A business name search of “Hi-Tech Dynamic Engine Balancing” indicates its ABN is 61 316 283 407 and the business is located at Seven Hills and is owned by sole trader, Adrian Maher. I am reluctant to allow the cost of $10,055.10 in full.
The other main invoice is from Jeff Ramsay Engineering dated 1 May 2024 for $1,474 for a Blower (supercharger). I have already dismissed any claim that the supercharger was not an original part or that it was damaged at the point of supply. It is not explained why a replacement supercharger is required, other than the blades had scoring. I would not allow this cost.
Another invoice (annexure “Z”) for $370.88 is issued by MSCN Motorsports to an unknown person, Nick Perkovski for Banjo bolts, hose ends, whip guards, crimp collars and bulkhead. It appears the wrong invoice for annexure “Z” has been attached as the amount in fact claimed is for $600 for fittings and hoses. I would disallow this invoice.
No documentary proof has been provided for oils and oil filter for $266.38. I disallow this claim.
Other invoices are issued to Lil Niks Mechanical Repairs. The applicant says this is his business. There is no ABN on the invoices. An ABN search for “Lil Niks Mechanical Repairs” indicates this business, with ABN 32 128 419 750, is located at Surfside and is owned by a company called BJMAN Pty Limited. Without a company search of BJMAN Pty Ltd, I have no evidence linking the applicant to BJMAN Pty Limited.
The rest of the invoices for approximately $7,000 are issued by Rocket Industries Pty Ltd. The respondents have disputed the majority of these parts as being unverified, unnecessary and unrelated to the engine.
Apart from the invoice from Hi-Tech Engine Balancing, which is stamped “paid”, there is no evidence that the applicant has paid any of the invoiced amounts, however this is not necessarily relevant as the applicant still has a liability to pay (if the loss is proven).
Difficulty of assessment is no bar to the assessment of damages, and a Court or Tribunal must do the best it can: Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54. In Amann at [31], Mason CJ and Dawson J note that in Jones v. Schiffmann [1971] HCA 52; (1971) 124 CLR 303 at 308, Menzies J. said that that the “assessment of damages ... does sometimes, of necessity involve what is guess work rather than estimation”.
Doing the best I can, I will reduce the amount claimed and allow $5,000. I have taken into account all of the deficiencies with the evidence of loss, the lack of explanation as to why certain engine parts were required and why machining costs are being claimed. I have also considered the applicant’s failure to mitigate thereby contributing to his loss plus remoteness and credit issues.
I am satisfied that the above order is fair and equitable to the parties pursuant to s 79U(1) of the FTA.

Costs of expert witness - $3,245

The applicant further claims the cost he has incurred for his expert, being Mr Marston’s preparation of a report ($2,640 incl GST) and his virtual attendance at the final hearing ($605 incl GST).
I disallow these cost rendered by the expert in the tax invoices dated 28 January 2024 and 10 February 2024. These costs can be characterised as legal disbursements to ascertain the quality of the engine, incurred after the proceedings had commenced. Whilst they may have been incurred as a direct result of the breach of s54, the claim properly falls within the rubric of “costs” governed by the provisions of s 60 of the NCAT Act, which is in the following terms:

60 Costs
(1) Each party to proceedings in the Tribunal is to pay the party’s own costs.
(2) The Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs.
(3) In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following—
(a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings,
(b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings,
(c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law,
(d) the nature and complexity of the proceedings,
(e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance,
(f) whether a party has refused or failed to comply with the duty imposed by section 36(3),
(g) any other matter that the Tribunal considers relevant.

(4) If costs are to be awarded by the Tribunal, the Tribunal may—
(a) determine by whom and to what extent costs are to be paid, and
(b) order costs to be assessed on the basis set out in the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014) or on any other basis.

(5) In this section—
costs includes—
(a) the costs of, or incidental to, proceedings in the Tribunal, and
(b) the costs of, or incidental to, the proceedings giving rise to the application or appeal, as well as the costs of or incidental to the application or appeal.

The applicant does not seek a costs order. In any event, I do not regard the circumstances of these proceedings as constituting “special circumstances.” The obtaining of an expert report in proceedings of this kind is an ordinary and usual requirement in order to support a claim for compensation for faulty goods and services. It follows that that there is nothing “special” about the necessity to obtain such a report which would support its cost being included in a costs order.

Section 18 ACL

As to the claim of misleading and deceptive conduct in contravention of s 18 of the ACL, it is not necessary for me to determine liability under s 18 as my award of damages would be assessed in the same way.
However, in Mr Marston’s opinion there has been an intention to conceal poor workmanship by the respondents. At paragraph 53 of his report he states, “During the repairer’s building process of the engine, it would have been noted that excessive gaps were present between these cylinders and inlet manifold.”
This is uncontroverted evidence that has not been refuted by the employee of the respondent, Mr Fox who is said to have built the engine.

Order

In accordance with these Reasons, I order the respondents to pay the applicant the sum of $5,000 in 14 days.

**********

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: 16 May 2025

Medium Neutral Citation:	Celovic v Righetti [2025] NSWCATCD 3
Hearing dates:	23 September 2024
Date of orders:	17 January 2025
Decision date:	17 January 2025
Jurisdiction:	Consumer and Commercial Division
Before:	J Alder, General Member
Decision:	(1) The Respondents, Ann Maree Righetti and Mark Romano Righetti trading as Engine Masters Australia, are to pay the Applicant, George Celovic, the sum of $5,000 within 14 days from the date of these Reasons.
Catchwords:	CONSUMER CLAIM – defective engine - where a party is both a supplier and a manufacturer - where a party has supplied both goods and services - when does the cause of action first accrue against a supplier for failure to comply with the guarantee as to acceptable quality - when is damage first sustained - did the consumer require the supplier to remedy the failure within a reasonable time - reasonable costs incurred by the consumer in having an engine repaired – foreseeable loss and damage – misleading and deceptive conduct - assessment of damages - failure to mitigate – remoteness
Legislation Cited:	Australian Consumer Law (NSW), ss 2, 3, 11, 18, 54, 55, 60, 236, 259, 260, 261, 262, 263, 267, 271, 272 Competition and Consumer Act 2010 (Cth) Fair Trading Act (NSW) 1987, ss 28, 74(3), 79L Civil and Administrative Tribunal Act (NSW), ss 38(4), 53(1), 60
Cases Cited:	Australian Competition and Consumer Commission v Valve Corporation (No 3) (2016) 337 ALR 647 [2016] FCA 196 Barbour v Autosports Five Dock Pty Ltd [2020] NSWCATAP 141 Cairns v AHG Newcastle Pty Ltd [2020] NSWCATAP 103 Capic v Ford Motor Company of Australia Pty Ltd [2021] FCA 715 Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54. Como Leather Pty Ltd v Harris [2017] NSWCATAP 95 D’Agostino v Anderson [2012] NSWCA 443 Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31; 110 ALR 608 Do Carmo v Ford Excavations Pty Ltd [1984] HCA 17; (1984) 154 CLR 234 Elivir Halilovic v Prestige Motor Sport Sydney Pty Ltd trading as Prestige Motor Haus Sydney [2018] NSWCATCD 4 Hawkins v Clayton [1998] HCA 15; (1988)164 CLR 537 Little v Khoury T/As GAS-250 Restorations [2018] NSWCATCD 47 McBride v Christies Australia [2014] NSWSC 1729 Medtel Pty Ltd v Courtney [2003] FCAFC 51 Moloney v Taylor [2016] NSWCA 199 My Pool Safety Inspector Pty Ltd v MCM Sutherland Pty Ltd [2024] NSWCATAP 58 Sacks v Hammoud [2016] NSWCATAP 225 Safi v Heartland Motors Pty Ltd t/as Heartland Chrysler [2016] NSWCATAP 80 Sutherland Shire Council v Heyman[1985] HCA 41 Tang t/as Better Aquariums v Karatasoulis [2018] NSWCATAP 140 Upton v Martin & Stein Antiques Pty Ltd [2016] NSWCATAP 228 Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 Wilson v Winnicott [2021] NSWCATAP 211 Winnote Pty Limited (in liq) v Page [2006] NSWCA 287 Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16; 216 CLR 515
Category:	Principal judgment
Parties:	Applicant: George Celovic
Representation:	Applicant: self-represented Respondents: Ann Maree Righetti
File Number(s):	2023/00445228
Publication restriction:	Nil