Dawson, Peter James v Motor Tyre Service Pty Ltd

[1981] FCA 104

C A T C H W O R D S

Trade Practices - misleading and deceptive conduct -

oral and written statements in the supply of goods and

services - motor vehicle repairs - onus and standard of

proof in prosecutions.

Trade Practices Act 1974ss53(f), 79(l)(b), 163(4)(b), 85(l)(a).

PETER JAMES DAWSON V MOTOR TYRE SERVICE PTY. LIMITED.

NOS. W.A. G2-3 Of 1981

FISHER J.

ADELAIDE

17 .JULY 1981

IN THE FEDERAL COURT OF AUSTRALIA

)

WESTERN AUSTRALIA DISTRICT REGISTRY) No. 2 of 1981

)

GENERAL DIVISION ) No. 3 of 1981

B E T W E E N :

PETER JAMES DAWSON

Prosecutor

- and -

MOTOR TYRE SERVICE PTY. LIMITED

Defendant

O R D E R

JUDGE MAXING ORDER: Fisher J.

DATE OF ORDER:	17 July 1981
WHERE MADE:	Adelaide
THE COURT ORDERS THAT:

1.	The informations relating to both charges G2 and	3
of 1981 be dismissed.

2. The Prosecution to pay to the Defendant its costs with

respect to the informations, the same to be taxed if

not agreed.

IN THE FEDERAL COURT OF AUSTRALIA	)
1

WESTERN AUSTRALIA DISTRICT REGISTRY) No. 2 of 1981 No. 3 of 1981

GENERAL DIVISION !

B E T W E E N :

PETER JAMES DAWSON

Prosecutor

- and -

MOTOR TYRE SERVICE PTY. LIMITED

Defendant

CORAM: Fisher J.

17 July 1981

REASONS FOR JUDGMENT

These two prosecutions are brought for allege4 contraventions by the defendant of the provisions of s.53(f) of tGe Trade Practices

- Act 1974 ("the Act"). That section so far as relevant to these

proceedings is in the following terms:

"53. A Corporation shall not in trade or commerce

in connexion with the supply or posslble supply of

goods or servlces or in connexion wlth the promotion

by any means of the supply or use of goods or services:-

(a) ... (c) ... (f) make a false or misleading statement concernlng the

need for any goods or services, or

( g ) ...

By his information lnstltutlng proceedlngs No.2 of 1981 the

prosecutor contended that the defendant -

2.

"being a Corporation in trade or commerce and trading as paragraph (b) of sub-section (1) of Sectlon 79 of the

Trade Practices Act 1974 contravene the provisions of

paragsa&h (f) of Section 53 of the sald Act in that it dld,

in connexion with the possible supply or services to one

Brian Alexander Argus in respect of his Chrysler Sigma

Motor Vehicle Registered .Number XX1.884, by its servant,

orally make a misleading statement to the said Brian Alexander

Argus concerning the need for such servlces in respect of the said motor vehicle."

The information in respect of proceedings No. 3 f 1981 was

in exactly similar terms except that in the latter proceedings

the alleged misleading statement was made "In a document entltled

'Lower Half Vehicle Safety' 'Quotation Form'".

The particulars to the summons in proceedings No.3 of 1981

identify the conduct alleged to constitute the contraventlon and

were as follows:

"1. On 18 February 1980 Brian Alexander Argus (Argus) took

his Chrysler Sigma Motor Vehicle (Registered NO. XX1 884)

(the vehicle) to the Defendant's premises-at Mldland and

requested the Defendant through Its employee Gary Wayne Dufall (Dufall) to balance the wheels of the vehicle as some vibration was being experienced.

2. Dufall after examining the vehicle n the presence of

Argus said to Argus words to the following effect:-

'There is a lot or work needed on the suspension. It is

pointless balancing the wheels until the work has been

done. Can I give you a quote on what needs to be done?'

3. Dufall after going into the office on the premlses

handed to Argus a document entitled 'Lower Half Vehicle

Safety Quotation Form' numbered 78 and dated 18 February

1980. This document will be referred to by the Prosecutor

at the hearingfbr Its full terms meaning and effect.

4. The work and services referred to in paragraph (2) hereof

and comprised in the document referred to In paragraph

(3) hereof were not needed and the statements contalned

therein were accordlngly misleading.

5. The statements referred to in paragraph (2) hereof and

contained within the document referred to In paragraph

( 3 ) hereof were made In connexlon with the posslble

supply by the Defendant of the services speclfled In the

document referred to In paragraph (3) hereof."

3.

In fact the Registered Number of the Chrysler Slgma vehlcle in question was xX1 844 but no polnt was taken on this score. Nor

did the defendant dispute that it was a relevant corporation and

that it did in trade or commerce, did in connexion wlth the possible

supply of services, make in the document, as identlfled, or orally

the alleged misleading statement. The sole issue was whether

the statement was in the circumstances mlsleadlng.

It was further not disputed that the relevant Mlnlster had

pursuant to s.l63(4)(b) consented In writlng to the proceedings.

The defendant contended that neither the oral statement nor the

statement contained in the document was in the clrcumstances mis-

leading but if they or either of them were mlsleading it relied on

the defence provided by s.85(l)(a) of the Act, namely:

"(1) Subjection to subsection (2). in a prosecution under

this Part in relation to a contravention 'of Part V,

it is a defence If the defendant establlshes -

(a) that the contravention in respect of whlch the

proceeding was instituted was due to reasonable

mistake.

(b) ...

(c) . . . I '

The facts which I find can now ?X? set out In narratlve form.

Argus was in February 1980 the owner of the Chrysler Sigma

vehlcle in question. He had purchased It new In Aprll 1978 and had

only used it for his own personal buslness. Argus agreed that the

vehicle had been something of a problem ever slnce he had had It,

having tail shaft and re-assembly problems, a number of tyre

problems and a problem wlth vlbration and wlth nolse In the

dlfferential. He said that he did not always notice the vibratlon

4.

himself but that it took a passenger to notlce it. In February 1980

the vehicle had travelled approximately 40,000 kllometres. In

early February 1980 he took the vehicle to Leederville Chrysler forz

routine service at which time he was having trouble wlth vlbration

and also the tyres. He said that he previously had trouble with

the tyres on the vehicle. Leederville Chrysler advised hlm to

contact "Goodyear" concerning his tyre problem. Argus said that at the time he was experiencing quite a solid vibration all through

the car, mainly through the steerlng wheel but that the w ole car

was affected by it. He said that he omitted to ask Leederville

Chrysler to balance his wheels but that when he reached home after the service he removed the faulty tyre and replaced It with his spare tyre.

Upon approaching the head office of "Goodyear" concerning

his tyres he was advised to go to the Midland branch of that

organization. The faulty tyre which he said was i< bad way, with

the steel belt coming through the tyre and with wear around almost

two thirds of its circumference,was replaced at that branch.

Argus said that as a consequence of the tyre being replaced, the

vibration whlch he had felt beforehand was not there though there

to have his wheels balanced as he hoped that would correct the

vibration problem.

was still a vibration. He therefore decided to return to Midland

It was on 18 February 198Q that he took the car back to the

defendant at Midland, asked for a wheel balance and told the

mechanic of the problem with vibratlon. It was not disputed that

the mechanic whom Argus saw was one Dufall, but Dufall has no

5.

memory of seeing the vehicle or Argus on that day, al hough

he agrees that he gave the quotation which contains the statement

in question and that he signed the quotation document. He can not

deny that he made the oral statement alleged against him. Argus

says that Dufall in company with another employee put his vehicle

on a hoist and both examined it. Whilst the examination was

taking place Argus went into the main office. He said that he

saw the mechanics examining the steering components underneath

the vehicle, one having a lever in his hand and that they were

manipulating the parts at the front end of the car and "working"

the tyres. The examination took about 15 minutes. One of the

mechanics then came to Argus and said that they had some bad news

for him, that it was necessary for a ce tain amount of work to be

done on the front assembly and that it would be pointless to do a

wheel balance until that work had been carried out. He was told

that the work would cost approximately $300 and that he could be

given a quote, Argus said that he would like a quot , whlch he was

given and which was headed "lower half vehicle safety" and contalned

the following details:

"Tie Rod Ends/Inner R.H.S. Replace 21.50

Tie Rod Ends/Outer L.H.S. Replace 21.50

Idler Arm/Idler Bush Replace ? 45.00

Shocks-Front Replace H/Duty Struts 135.00

Shocks-Rear Replace	39.50
Wheel Alignment-Front Adjust

Pitman Arm Replace ? 50.00

$312.50 "

Dufall signed the quote as the person having carrled out the inspection and he placed the two question marks on the document.

Argus was then taken to the car, whlch was stlll on the hoist,

at the suggestion of the mechanlcs to see the parts referred to in

the quote. He said that he was taken under the car and shown some

6.

of the steering arms with movement i them. He says he was told

that the movement should not be there and that was why the work was

required. The mechanics were able to twlst the tle rods and move the front tyres up and down. Argus said that he only had a small

knowledge of motor vehicles and that he relied malnly on the

Judgment of the mechanics but that he deflnltely notlced movement.

The mechanics also indicated oil stalns on the strut of the front

right hand shock absorber and said that these stalns indicated

that the shock absorber was leaking and needed replaclng. They also

said that the two rear shock absorbers were not functlonlng and

that they should be replaced.

Mr. Argus sald that he was "a bit upset" to dlscover that hls

vehicle required this amount of work performed on it so shortly

after service being done by Leederville Chrysler. Thus the flrst

thing that he did after receiving the quote was to telephone William

Noel Griggs the Manager of Leederville Chrysler to-tell him that

"we appeared to have problem with the car and I wanted to have a

discussion with hlm about It and see what It was all about". In

fact it was the following day 19 February 1980, that Argus took

the vehicle and the quote to Griggs. Argus sald that the discussion

with Griggs was not very frlendly and that he put It to Griggs

that he was concerned how it came about that the vehicle had been

serviced most of its life by Leederville Chrysler and the need for

the work quoted had not been plcked up. Grlggs acknowledged that

Argus was rather upset.

It was in this atmosphere that Grlggs made his lnspectlon, which was performed by Griggs using a floor jack to llft the front

7.

of the vehicle about one foot above the ground and examining the

relevant parts. Griggs did not get under the vehicle. Argus

said that Griggs informed him that as far as he could tell there

was nothing wrong with the vehicle, that the parts which had

movement should have movement when the vehicle was jacked up but

that there was no movement when the vehicle was on the road. Griggs

agreed that the rear shock absorbers dld need replacing, and during

the inspection a mechanic adjusted the left front wheel bearlng

and the damper on the ateerlng box. Argus said that Griggs told him

that in order to satisfy him completely that no work was needed he

would arrange for the vehicle to be lnspected by the Royal

Automobile Company at no cost to him. Grlggs said that he saw

the oil on the front shock absorbers whlch he consldered came

from a spillage and he wlped it off later.

Griggs described in some detall the tests that he made for the

purpose of checking the movement in the lower ball .. '~omts, namely

by grasping the wheel of the vehlcle on the holst at what was

described as 12 o'clock and 6 o'clock and also at 3 o'clock and

9 o'clock and moving the wheel in the horizontal phase. He said

that thereby an indication could be obtalned whether the wheel

bearings and the lower balls on the front suspenslon were loose or

needed adjusting. The idler arm and pitman arm were also checked

by the movement of the wheel whllst holding it at the 3 o'clock and

9 o'clock positions. He also checked the recoil of the shock

absorbers by bounclng the vehicle. Grlggs' opinion after

conducting his tests was that apart from the rear shock absorbers

the work quoted was not necessary.

a.

Griggs said that at the end of his tests Argus was still

somewhat apprehensive and that he was not satlsfied that Argus

was "behind him" and accepted his opinion. For that reason, he said

he offered personally to take the vehicle to the Royal Automoblle what he was telling him was the actual fact.

The vehicle was taken to the Royal Automobile Company by

Griggs where it was inspected by one Neville Lindsay Campbell, Campbell was given a copy of the quotation prepared by Dufall and

he gave a detailed description of the tests which he performed.

As it is not necessary for me to make an objective determination of what are the appropriate tests and whether such tests were

properly carried out and produced the correct results, I need

not refer in great detall. It would only be if mistakes were

established as havlng been made or the tests or judgments were

utterly unreasonably arrlved at or held that such Rronouncements

would be necessary or appropriate. I am not required to rule on

whose opinion is correct but only whether Dufall's opinion was

reasonably held.

Campbell gave on 26 March 1980 a wrltten report to Grlggs

upon the results of hls tests in the following words:

"Today we inspected front suspension and steering components

on above vehicle and found no abnormal wear in the followlng:

Idler arm bush

Front suspension legs

Pitman arm

Tie rod ends

Replacement of these components 1s not consldered necessary."

9.

Campbell was firmly of opinlon that the wear to the tie rod

ends was only normal wear In the circumstances of the vehicle's mileage and was not abnormal. The check that he made of the Zront end section of the vehicle was done without asslstance and was

the same check as the Royal Automoblle Company performs as a

pre-purchase check. He acknowledged that a pre-purchase check

was "necessarlly superficial", whlch comment he said would apply to

his check of Argus' vehicle. He also agreed that nothing was

reported to him of the history of the vehicle's troubles and that

such a report would properly influence a mechanic'scheck and

judgment. Another mechanic,he agreed,could reasonably react

differently. Moreover it was his opinlon that the tie rod ends

could not possibly be out of speclficatlon after 60,000 kilometres

and if they were it was indicative of rough usage of the vehicle

or sub-standard parts.

On 8 May 1980 the branch of the Trade Practices Commission in

Perth wrote to the defendant advising it of the contention that

there had been a contravention of the Act. Thereafter a number

of further tests and inspections were made of the vehlcle, some

of them being routine service work and others were tests by

independent experts. The examinatlon which was the most significant

for the purpose of determlnlng the reasonableness of Dufall's

opinion that the tie rod ends were worn was that carried out by

Griggs on 24 March 1981 when he made measurements in the presence

of a representative, the area Service Manager. of the Manufacturer,

Chrysler (now Mitsubishi) Corporation. This was performed with a

vernier by which was measured both the compressed length and the

free length of the ball jolnt. The difference In the two readlngs

indicated the actual movement, whlch If less than 1.524 mlllimetres

would be within permissible tolerance as laid down by the

10.

manufacturer. Griggs interpreted the result of his tests as being

that the movement of each joint was well wlthin that tolerance,

the greatest movement being .18m and the least being .llm.

However under cross-examination he acknowledged that he had misread

the measurements, which in truth were in the range of 1.8m and l.lm. Thus approximately 20,000 kilometres and twelve months after Dufall's examination, the movement of only one joint was

within tolerance, and the other ree, on the manufacturer's

recommendation, required replacement.

The defendant's witnesses were Dufall and the Servlce

Manager of the Company, McKinlay and two outslde experts. Both Dufall and MrKinlay satisfied me that they were competent and conscientious and there was not the slightest lndlcatlon that either of them, and Dufall in partlcular deliberately represented* unnecessary work was required. The two outslde experts were

respectively Douglas John Costello ("Costello") thk principal of

the Carlisle Technical College, which was described as the State's

foremost automotive training College for tertiary students and

apprentices and William Ernest Lowe("Lowe") who was head of Stlrlinc

Adjusters Pty. Ltd. a company acting as consultants b the

insurance and automotlve industry. Its primary actlvlty was to

determine the cause, effect of and cure for vehlcle problems.

Both were impressive witnesses who criticised the tests of

Griggs and Campbell and who were of the oplnlon that Dufall's judgment of the need for the relevant work was probably reasonably held.

11.

In the context of such conflicting views from so many

experienced technicians it is as well to reiterate the issue before

me as I see it, namely whether I can be satisfied beyond reasonable

doubt that the quoted work or some part thereof was not needed.

It is axiomatic and indeed accepted by both parties that there 1 s

no obligation upon the defendant to establlsh that any of hat work

was necessary. The need for the work was a m tter of ~udgment

and In the circumstances of this case not capable of positlve proof

one way or the other. The prosecutor must discharge the onus of

establishing to the relevant degree of certainty that the fact that

the work was not needed was the only judgment or op ion whlch

reasonably could be held. Any reasonable doubt must be resolved in

favour of the defendant. Furthermore I accept the submlssion of

counsel for the defendant that work whlch 1s desirable or preferable

is "needed". This construction is conslstent wlth Keehn v

Medical Benefits Fund of Australia Ltd (1977) 14 A.L.R. 77 at 82

and the text book writers. Services may be "needeh" even though

it is not Imperative or essential that they be performed forthwith.

Coming down to the facts of this matter Dufall expressed view as to the need for the work. a

Is that a view, a judgment or

an opinion which no reasonable man could in good faith have held?

This is a matter for oblective determlnation by me based upon

and in the light of the opinions expressed In evldence. I hav

no reason to doubt the honesty, the competence or the truthfulness

of any of the witnesses, all of whom were experlenced and

conscientlous. Nor did I detect any attempt on the part o f any

witnesses to cover up for possible past neglect or overslght.

However, unless I can find that the evldence In partlcular of the

defendant's outside witnesses IS unacceptable or dlscredlted In

cross-examination, there must remain a doubt whether the prosecutor

can discharge his onus.

12.

As the prosecutor and his wltnesses carry the obllgatlon

to establish the positive case, it is appropriate to assess that

case by reference to the opinions of Costello and Lowe. Both of

these witnesses heard all the evidence concerning the exanunatlons

of the vehicle by Dufall (as related by Argus), Griggs and Carpbell.

Counsel for the prosecution did not suggest any ground upon whlch

I could or should discount their evidence. Rather he submitted I

should, approach the tests of Dufall and the quote he tendered

as having been done contrary to Argus' instructions. I dlscuss

this submission later. Both Costello and Lowe were of the opinion

that Dufall and his assistant were more thorough ln their

examination and they attached much signiflcance to the fact that

the examination was performed and the work recommended ln the

light of their knowledge of the vlbration problem. Thls problem

was not brought to the attentlon of Griggs and Campbell when

they madstheir examinations. Both Costello and Lowe were critlcal

of these examinations. Furthermore they drew attentlon to

the fact that both Griggs and Campbell not only were unassisted

at the time of examinatlon but each acknowledged that they

were influenced by the relatively low mileage of the vehicle in

arriving at their conclusions. Their opinion that Dufall

might reasonably have determined as a matter of judgment that

the work was necessary In 1980 was confirmed by the measurement

tests in 1981, whereas the results of such tests did not support

and in fact denled Griggs' opinion In March 1981 that replace-

ment of parts was not necessary even at that time. Wlth the

beneflt of hlndsight each of them was of posltlve opinion that

at least some parts of the quoted work was probably needed in

February 1980. Furthermore Costello agreed that dlfferent tests

often produced different results and that it was quite possible

13.

for different mechanics to differ reasonably as to the ,need for

the replacement of parts. In general therefore I cannot see that

I can be satisfied to the requlsite degree of certainty that the

work quoted or some part of it was not needed in February 1980.

The submission of counsel for the prosecution however requires me to take the matter somewhat further.

In the first instance he submitted that I s ould be considering

the need for the work in the light of Argus' request for a wheel

alignment. He contended that for the purposes of a wheel alignment

there was no need for the work and that wheel alignment was

established by subsequent events to be all that was necessary.

On this score the contrary case from the defendant was that the

need for the work must be viewed in the light of the acknowledged

vibration problem. Such an approach recelves support from the

prosecutor's particulars in support of the summons where it was

stated that Argus "requested the defendant through L 'its employee

Gary Wayne Dufall (Dufall) to balance the wheels of the vehicle as some vibration was beinq experlenced" (emphasls added). There

is no doubt that the evidence established that the vehicle had a

vibration problem and that Argus was concerned about that problem

throughout the relevant time and even as late as March 1981 when

he spoke about it to McKinlay. There 1s likewise no doubt on

Argus' evidence that he drew Dufall's attention to this problem

and the inference can readily be drawn that the latter took it Into

account when making his examlnation and recommendation. If it was

a wheel alignment alone that Argus wished and If he had not at

least by implication sought asslstance on the vibration problem

he surely would have sald o expressly after Dufall told him that

it was a waste of money dolng a wheel alignment. Instead he

14.

accepted Dufall's invitation to view the allegedly defectlve parts

and to be given a quotation for replacement thereof. In my

opinion there is no justification for restricting the "need" to

the work involved in a wheel balance rather than what was needed

generally. Furthermore there was evidence from Costello to the

effect that if vibration occurs at all speeds (as lt did in the

present instance) his "teaching and practice" is that the problem

is more than wheel balance and that steerlng wear could well be

a factor. In my opinion it is proper to consider the matter of

need in the way in which it is stated by the particulars, namely

a request for	a wheel balance as "some vibration was being
experienced".

It is also necessary ti, determine whether the prosecution has

establisbdthat in respect of any partlcular Item of work there

was no need for it to be performed in February 1980. Sepzrate

consideration must be given to each item or class af items. In

the quotation Dufall recommended replacement of the Inner Tle Rod

End an the right-hand slde of the vehlcle and the Outer Tie Rod

End on the left-hand side thereof, in each instance at a cos of

$21.50. Such a need would doubtless, on the evldence, have been

determined as a result of his tests and in the light of the complaint of vibration at all speeds. The tests carried out by Griggs and Campbell have been compared unfavourably with those

conducted by Dufall and his assistant and without the knowledge of

the vibration problem. Subsequently in March 1981 three of the

four are shown by measurement to be worn beyond manufacturer's

tolerance. I can not say in the circumstances that the tests

conducted by Grlggs and Campbell and thelr oplnions based on

such tests satisfies me beyond reasonable doubt that the work

15.

recommended was not needed.

Dufall referred next in his quotatlon to the need to replace

the Idler A?m/Adler Bush at cost of $45.00. He accompanied this

recommendation with a question mark. The recommended replacement

of the Pitman Atm can be considered wlth the Idler Arm/Idler Bush

as it also is accompanied by a question mark and the cost was $50.00

The same comments and criticisms can also be made on the tests of Griggs and Campbell in respecttn thls Item as again the vlbration problem has relevance. Each of them Costello and Lowe attached

significance to the fact that the vibration occurred at all speeds

and said that while wheel alignment might be the problem It

frequently was much more. Both agreed that a mere wheel allgnment

was a waste of time and that it was reasonable of Dufall to

suspect wearing in those items. I am not satisfled that the

prosecutor has made out his case In respect of these two items.

-

The next dlsputed items are the "Front Shocks" and the

"H/Duty Struts" which were alleged to require replacement at a

cost of $135.00. They were identified as being McPherson Struts.

Lowe in his evidence was of oplnion that the vibration problem

could be linked with trouble in the McPherson Struts particularly

as all witnesses agreed that Dufall's recommendation for replacement

of the Rear Shock Absorbers was correct. It is agaln reasonable

to assume that the former recommendatlon was made in reliance upon

the vibration complaint as well as the presence of oil stains n

one of the struts. Such oil stains were not vlslble at the time

of the inspection by Campbell and he does not descrlbe them as

McPherson Struts but as Front Suspenslon Legs. Both Costello and

Lowe agreed that the presence of oil stains was a matter of

16.

significance and that the only other test was that of bouncing

the vehicle. A combinatlon of these two tests, presence of oil

and bouncing, would indicate to a mechanic whether the shock

absorbers were workmg properly. Lowe was of oplnlon that the

defectlve rear shock absorbers could affect the performance of the

McPherson Struts, that the oil thereon could only have come from

the Struts and that it was posslble for a Strut to leak a small

amount of oil on one occasion only. He further stated that If one agreed with these opinions of Lowe, and Campbell acknowledged

that in most cases oil on a McPherson Strut could only have come

from the Strut and that the defective rear shock absorbers could

affect the front suspension. Campbell also agreed In respect of

this Item as well as the other items that another mechanlc could

reasonably reach conclusions different to his.

It is my opinion that in respect of each of these ltems the

prosecutor has not established on the evidence elther that the

work was not necessary or that Dufall could not have reasonably

reached the concluslon that I was necessary. The prosecution

must fail in respect of both the written and the oral statements and each Information must be dlsmlssed with costs to be taxed if not agreed.

I certify that thls and the precedll,g

pages are a true copy of the Reasons for

Judgment of Mr Justrce Flsher,