Deng and Su v Western Region Automotive Pty Ltd and Ford Motor Company of Australia Pty Ltd

[2025] NSWCATCD 10

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Deng and Su v Western Region Automotive Pty Ltd and Ford Motor Company of Australia Pty Ltd [2025] NSWCATCD 10

Hearing dates:

6 December 2024

Date of orders:

10 March 2025

Decision date:

10 March 2025

Jurisdiction:

Consumer and Commercial Division

Before:

JA Rose, General Member

Decision:

(1)      The application is dismissed because, having considered the material put before it, the Tribunal is not satisfied to the civil standard, being the balance of probabilities, that there are grounds to make the orders sought.

Catchwords:

CONSUMER LAW — Consumer guarantees — Supply of goods — Guarantee as to acceptable quality

CONSUMER LAW — Consumer guarantees — Supply of goods — Guarantee as to fitness for disclosed purpose

Legislation Cited:

Australian Consumer Law (NSW)

Fair Trading Act 1987 (NSW)

Cases Cited:

AJC Portables Pty Ltd v Muras [2020] NSWCATAP 150

APS Satellite Pty Ltd (formerly known as Sky Mesh Pty Ltd) v Ipstar Australia Pty Ltd [2016] NSWSC 1898

Australian Competition and Consumer Commission v Jayco Corporation Pty Ltd [2020] FCA 1672

Ballard v Multiplex [2012] NSWSC 426

Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336

Contact Energy Ltd v Jones [2009] NZHC 2631; [2009] 2 NZLR 830

Crooks v Hyundai Motor Company Australia Pty Ltd [2023] NSWCATCD 29

Davis Contractors Ltd v Fareham Urban District Council [1956] UKHL 3; [1956] AC 696

Healthcare at Home Ltd v The Common Services Agency [2014] UKSC 49; 4 All ER 210

Hutchinson v Central Coast Automotive Pty Ltd [2022] NSWCATCD 123

LSH Auto (Sydney) Pty Ltd v Sherman (No 2) [2021] NSWCATAP 272

Medtel Pty Ltd v Courtney (2003) 130 FCR 182; 198 ALR 630; [2003] FCAFC 151

Merck Sharp & Dohme (Australia) Pty Ltd v Peterson (2011) 196 FCR 145; 284 ALR 1; [2011] FCAFC 128

Nguyen v Cosmopolitan Homes [2008] NSWCA 246

Pollock v NSW Trustee & Guardian [2022] NSWSC 923

Prestige Auto Traders Australia Ltd v Bonnefin [2017] NSWSC 149

Safi v Heartland Motors Pty Ltd t/as Heartland Chrysler [2016] NSWCATAP 80

Simmons v Peter Warren Automotive Pty Ltd trading as Macarthur Ford Campbelltown and Ford Motor Company of Australia Pty Ltd trading as Ford Australia [2023] NSWCATCD 74

Vautin v By Winddown (No 4) [2018] FCA 426; (2018) 362 ALR 702

Warner v Hung, in the matter of Bellpac Pty Ltd (Receivers and Managers Appointed) (In Liquidation) (No 2) (2011) 297 ALR 56; [2011] FCA 1123

Texts Cited:

Nil

Category:

Principal judgment

Parties:

Jing Deng and Ziyun Su (Applicants)
Western Region Automotive Pty Limited, trading as “Sinclair Ford” (First respondent)
Ford Motor Company of Australia Pty Limited (Second respondent)

Representation:

J Deng and Z Su, in person (Applicants)
A Morgans, authorised officer (First respondent)
J Newbound, authorised officer (Second respondent)

File Number(s):

2024/316205

Publication restriction:

Nil

REASONS FOR DECISION

Introduction

1. This proceeding arises out of the purchase by the applicants of a new 2023-model Ford Everest motor vehicle (the “vehicle”) from the first respondent (“Sinclair Ford”) on or around 26 July 2023.

2. By the application form that they lodged with the Tribunal on 27 August 2024, more than a year after they purchased the vehicle, the applicants have made a claim against Sinclair Ford as the seller of the vehicle and the second respondent (“Ford Australia”) as the manufacturer/importer of the vehicle, under Part 6A of the Fair Trading Act 1987 (NSW) (the “FT Act”) and the consumer guarantees contained in Part 3-2 of the Australian Consumer Law (NSW) (the “ACL”).

3. The application form described the basis of the applicants’ claim, as follows (my underlining):

REASONS FOR THE ORDER(S)

The vehicle sold through Ford Australia motor dealership - Sinclair Ford, is covered by consumer guarantees that it must: be of acceptable quality and be safe), be fit for any purpose before the sale. match the description and Ford Australia Advert ( provided which is suitable to be driven in Australia roads and terrains, including reversing safely on our drive path. Neither were we made aware of the defects before we bought the vehicle. The two defects we are complaining here: - Defect 1 Rust underneath the vehicle: we discovered the rust throughout under body of the vehicle and is still spreading, only a year (9,800km on odometer) after purchase. The vehicle was only for family driving usage on city roads, interstate highways, freeways, car parks, kids school runs. We never ever attempted to drive the vehicle off road or onto the beach sand, even though this vehicle is heavily promoted by Ford Australia as the vehicle for off-road driving and even beach exploring or camping (see Ford official clips here ( As we were among the early buyers who ordered the next generation of Ford Everest, our order delivery took a year from Thailand to Australia via sea route. The vehicle was manufactured in May 2022 in Thailand. It took till July 2023 for delivery arrived at dealership. We were also informed by the dealer that the vehicle had unprecedent lengthy delayed at sea ports during the period. We suspect that the cause of rust in this vehicle was likely caused by the exposure to the environment during the vehicle being stored and transported via sea. - Defect 2 Reverse Brake Assist (RBA) malfunction. Please review attached doc for detail of safety hazards. Ford requires us use “workaround” to navigate deep inside the setting menu tree to disable the function, at every time we reverse the vehicle on our drive path. This issue/workaround was not disclosed to us before the sale.

The application form described the relief sought by the applicants against Sinclair Ford and Ford Australia, as follows (my underlining):

ORDER(S) SOUGHT

The respondents to: Fix the two major defects of the new Ford Everest we purchased: - Defect 1: The Rust is throughout under body of the vehicle and affecting many components there, and it continues the spreading to other parts, thus causing safety hazard of ongoing usage of the vehicle. - Defect 2: The Reverse Brake Assist (RBA) malfunction needs to be fixed or the RBA function needs to be disabled permanently, as this issue becomes the safety hazard that we are facing, every time when we reserve the vehicle down our drive way, which is slightly on slope connected directly into the arterial road – XXXXX X Street in West Pennant Hills. Please see detail of the hazard explained in our complaint to NSW Fair Trading - under case of reference Number XXXXX X. OR - Replace with the defect-free vehicle of same or better condition. OR - Refund our purchase of the vehicle

4. The application came before the Tribunal for conciliation and an initial (group list) hearing on 8 October 2024. Conciliation was not successful, so the Tribunal (Member Gardner) adjourned the proceeding for hearing as a special fixture on a date to be confirmed by the Registrar. In doing so, the Member made directions for all parties to lodge with the Tribunal and give to each other, by certain dates, copies of the documents that they intended to rely on at the hearing, including expert evidence setting out the defects alleged in the vehicle.

5. All parties have lodged documents in substantial compliance with those directions.

The hearing

6. The proceeding then returned before the Tribunal for hearing by me on 6 December 2024. The applicants appeared in person at the hearing, while the respondents appeared virtually, by telephone link. Sinclair Ford was represented by its service manager, Andrew Morgans, while Ford Australia was represented by Justin Newbound, its customer liaison manager.

7. The hearing proceeded in the usual manner. All parties were given the opportunity to present their evidence and to question the other party on the issues in dispute in the proceedings. They also had the opportunity to make submissions to the Tribunal and to respond to the other party’s submissions. As the moving parties, the applicants went first, followed by Sinclair Ford and Ford Australia. I am satisfied that both parties had a reasonable opportunity to present their respective cases to the Tribunal.

8. In summarising their claim at the start of the hearing, the applicants confirmed that they sought a replacement vehicle, together with compensation for (amongst other things) the risk that the vehicle may have been involved in a collision and for their time and emotional distress in pursuing the claim against the respondents. They also confirmed that they relied on the consumer guarantees in ss 54 and 55 of the ACL, which I will refer to below. They indicated that they intended to rely on an expert report obtained from Harry Tachdjian, a licensed motor vehicle tradesperson with MTA Vehicle Inspections, dated 10 October 2024.

9. Both respondents denied the claim against them, asserting that (firstly) the rust claimed by the applicants was surfaced corrosion only, which had been caused by factors occurring since the applicant had purchased the vehicle. They also asserted that the reversing sensor issue raised by the applicants was a safety feature of the vehicle which was working to its design intent. They denied any obligation to replace the vehicle, or to provide a refund for it, or to provide any compensation to the applicants.

10. As the moving parties, the applicants have the burden of proving the elements of their claim to the civil standard, which is the “balance of probabilities”. The respondents must prove any positive defences to the same standard. In respect of proving a fact on the balance of probabilities, Hallen J in Pollock v NSW Trustee & Guardian [2022] NSWSC 923 set out the applicable authorities as follows at [74]-[75]:

Emmett J in Warner v Hung, in the matter of Bellpac Pty Ltd (Receivers and Managers Appointed) (In Liquidation) (No 2) (2011) 297 ALR 56; [2011] FCA 1123 wrote at [48]:

“When proof of any fact is required, the court must feel an actual persuasion of the occurrence or existence of that fact before it can be found. Mere mechanical comparison of probabilities, independent of any belief in reality, cannot justify the finding of a fact. Actual persuasion is achieved where the affirmative of an allegation is made out to the reasonable satisfaction of the court. However, reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequences of the fact to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, and the gravity of the consequences flowing from a particular finding are considerations that must affect whether the fact has been proved to the reasonable satisfaction of the court. Reasonable satisfaction should not be produced by inexact proofs, indefinite testimony or indirect inferences: see Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 at 361-2; [1938] ALR 334 at 342.”

In Nguyen v Cosmopolitan Homes [2008] NSWCA 246, speaking with the concurrence of McColl and Bell JJA, McDougall J, similarly, had expressed the view, at [44]-[52], that proof on the balance of probabilities required a feeling of actual persuasion; that the event in question was more likely than not to have occurred; with “a probability in excess of 50%”. His Honour repeated that view in Ballard v Multiplex [2012] NSWSC 426 at [126].

I have applied those principles in determining the applicants’ application.

11. I reserved my decision at the end of the hearing. On 17 December 2024, after I reserved my decision, the applicants wrote to the Tribunal requesting leave to re-open their case and adduce fresh evidence regarding an assessment and quotation from a third-party specialised in motor vehicle rust removal, repair and treatment. On 23 December I made directions for the parties to lodge any documents and submissions that they wished to rely upon in respect of that request. All parties lodged documents and submissions in accordance with those directions.

12. On 13 February 2025, I made orders refusing leave for the applicants to re-open the case and adduce that evidence, for the reasons that were published with those orders.

13. For the reasons that now follow, I have decided that there are no grounds to make the orders sought. Accordingly, the application must be dismissed.

The evidence

14. The applicants relied on two bundles of documents that they had lodged with the Tribunal and provided to the respondents on or about 28 October 2024, which were marked as exhibits A1 and A2 respectively and which included:

1. a chronology of events;

2. witness statements, made by the applicants;

3. an Orix Australia Corporation Limited quotation and order form for the vehicle, dated 26 July 2022 [sic];

4. a letter of authority from Insurance Australia Group Ltd, dated 21 August 2023;

5. a certificate of registration for the vehicle, in the name of Insurance Australia Group Ltd, dated 23 July 2024;

6. Sinclair Ford’s service tax invoice, dated 23 August 2024;

7. an inspection report prepared by Harry Tachdjian of MTA Vehicle Inspections, dated 10 October 2024;

8. various bundles of photographs, showing: (a) the underside of the vehicle; (b) the driveway at the applicants’ home; (c) a view of the screen on the vehicle’s dashboard when the vehicle is reversing out of that driveway; and (d) other parts within the vehicle;

9. emails and other correspondence with the respondents and with NSW Fair Trading, dated variously; and

10. an ASIC company extract for Ford Australia.

The respondents did not object to any of those documents being used as evidence in the proceeding. They also did not require the author of the MTA Vehicle Inspections report for cross-examination on the issues in the proceeding.

15. Both applicants also gave sworn oral testimony in support of their claims.

16. Ford Australia and Sinclair Ford both relied on the bundle of documents which Ford Australia had lodged with the Tribunal and provided to the other parties on or about 12 November 2024, which was marked as exhibit R1. Those documents included:

1. Mr Newbound’s unsworn statement, dated 8 November 2024;

2. extracted pages from the 2022 Everest owner’s manual concerning reverse brake assist and cleaning the underbody of the vehicle; and

3. a vehicle report from Chris Jones, service manager at Sinclair Ford, dated 31 October 2024.

The applicants did not object to any of those documents being used as evidence in the proceeding. Mr Jones did not give evidence, and was not required for questioning on his report.

17. Mr Newbound and Mr Morgans both gave sworn oral testimony in response to the applicants’ claim.

Jurisdiction

18. Part 6A of the FT Act seeks to provide remedies for, and the straightforward resolution of, disputes concerning the supply of goods and services to consumers. Section 79I, within that Part, empowers consumers (as defined in Part 6A) to apply to the Tribunal for determination of a “consumer claim”. Section 79J gives the Tribunal jurisdiction to hear and determine a consumer claim that is the subject of an application under the Division, subject to the limitations specified in that Part.

19. I am satisfied on the evidence that:

1. Ford Australia imports new cars into Australia in the course of carrying on a business, for sale by its network of car dealers, and is a “supplier” for the purposes of Part 6A: s 79D.

2. Sinclair Ford suppliers new and used cars to its customers in the course of carrying on a business and is also a “supplier” for the purposes of Part 6A: s 79D.

3. Ford Australia imported the subject vehicle (which is a “good” within the meaning of the FT Act) into Australia in early 2023. Sinclair Ford subsequently supplied the subject vehicle to Ms Deng: s 79G(1).

4. Ms Deng is a “consumer” for the purposes of Part 6A, including because (firstly) the respondents have not sought to argue to the contrary: 79H; and (secondly) the vehicle was “supplied” to Ms Deng, regardless of who the true purchaser of the vehicle was: s 79D.

5. The applicants’ claim seeks one or more of the remedies specified in s 79E (namely, an order for the replacement or repair of the vehicle and/or an order for the payment of money) in respect of a claim that arises from the supply of the vehicle by Sinclair Ford to Ms Deng. Consequently their claim is a “consumer claim” for the purposes of Part 6A: s 79E.

6. The claim has a sufficient connection with New South Wales, including because the vehicle was supplied to the applicants in New South Wales: s 79K.

7. The claim has been lodged within the limitation period of 3 years after the cause of action giving rise to the claim first accrued: s 79L.

20. Consequently, I find that the Tribunal has jurisdiction to hear and determine the applicants’ claim. I am also satisfied that the relief sought by the applicants is within the Tribunal’s power under ss 79N-79V of the FT Act.

The applicable law

21. The ACL is a Commonwealth law, which is made as part of the Competition and Consumer Act 2010 (Cth). Section 28 of the FT Act applies the text of the ACL, as it exists from time to time, as a law of New South Wales.

22. Part 3-2 of the ACL imposes a series of compulsory guarantees on all supplies of goods and services to consumers.

(a)   The guarantee of acceptable quality

23. The case presented by the applicants at the hearing first asserted that the vehicle was not of “acceptable quality”, as that term is defined in ACL, s 54, for the reasons described above. Subsections 54(1)-(3) provide (my underlining):

54    Guarantee as to acceptable quality

“(1)    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.

(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).

(3)    The matters for the purposes of subsection (2) are:

(a)    the nature of the goods; and

(b)    the price of the goods (if relevant); and

(c)    any statements made about the goods on any packaging or label on the goods; and

(d)    any representation made about the goods by the supplier or manufacturer of the goods; and

(e)    any other relevant circumstances relating to the supply of the goods.”

24. The remaining subsections set out some particular rules for assessing whether an item is of acceptable quality. The respondents have raised subsection 54(6) in their defences, but none of the other subsections appear to apply in the present case. Subsection 54(6) provides:

(6)   Goods do not fail to be of acceptable quality if:

(a)   the consumer to whom they are supplied causes them to become of unacceptable quality, or fails to take reasonable steps to prevent them from becoming of unacceptable quality; and

(b)   they are damaged by abnormal use.

For that subsection to apply, both limbs must be demonstrated on the balance of probabilities. That is, it must be proved on the balance of probabilities that the consumer has caused the goods to become of unacceptable quality or has failed to take reasonable steps to prevent them from becoming of unacceptable quality, and that the goods have been damaged by “abnormal use”.

25. The guarantee in s 54 relies on the relevant “supply” of the “goods” being made by a “supplier” to a “consumer” “in trade or commerce”. Those terms are defined in ss 2-3 of the ACL. I am satisfied that those terms apply to the applicants’ situation in the same manner as the corresponding definitions in Part 6A of the FT Act, just referred to.

26. In order to succeed in a claim based on ACL s 54 a consumer must establish that he or she suffered loss or damage by reason of the goods not being of “acceptable quality” (as defined) at the time the goods were supplied to the consumer: Merck Sharp & Dohme (Australia) Pty Ltd v Peterson (2011) 196 FCR 145; [2011] FCAFC 128 at [180] per Keane CJ, Bennett and Gordon JJ; AJC Portables Pty Ltd v Muras [2020] NSWCATAP 150 at [85].

25. In LSH Auto (Sydney) Pty Ltd v Sherman (No 2) [2021] NSWCATAP 272 the Appeal Panel set out the legal principles applicable in a case involving a claim under section 54 of the ACL at [35]-[36]:

[35]   The relevant principles to apply in a case such as the present were summarised by Derrington J in Vautin v By Winddown (No 4) [2018] FCA 426; (2018) 362 ALR 702 as follows:

“[142]    Mr Vautin asserts that the existence of the construction defects in the sandwich core panels of Revive means that the vessel is not of an “acceptable quality” within the meaning of the guarantee imposed by s 54 of the ACL. In determining whether the guarantee in that section is contravened the following matters are relevant:

(a)    The test as to whether goods are of an “acceptable quality” is an objective one; being taken from the perspective of a “reasonable consumer” (APS Satellite Pty Ltd (formerly known as Sky Mesh Pty Ltd) v Ipstar Australia Pty Ltd [2016] NSWSC 1898 (APS Satellite Pty Ltd) at [57]; Merck Sharp & Dohme (Australia) Pty Ltd v Peterson (2011) 196 FCR 145; 284 ALR 1; [2011] FCAFC 128).

(b)    The question for the “reasonable consumer” is whether the goods in question have the identified qualities enumerated in 54(2) to an “acceptable standard”. This requirement is derived from the words “as a reasonable consumer ... would regard as acceptable”.

(c)    The “acceptable standard” is used as the yardstick against which the qualities of the goods are to be measured. It is ascertained by a consideration of the matters referred to in s 54(3); the nature of the goods, their price, any statement made about the goods on packaging or labels, any representations made about the goods by the supplier or manufacturer, and any other circumstance relating to their supply.

(d)    It is necessary the goods have all of the qualities identified in s 54(2) to the ascertained acceptable standard. Those qualities are that the goods are fit for all the purposes for which goods of that kind are commonly supplied, acceptable in appearance and finish, free from defects, safe and durable.

(e)    In the assessment of whether the goods meet that relevant standard, the reasonable consumer is taken to be fully acquainted with the state and condition of the goods (including any hidden defects of the goods).

(f)    If the goods supplied do not have all of the identified qualities to the acceptable standard, they will not be of an “acceptable quality”.

[143]    In compendious terms, the issue is whether, objectively, the goods supplied (when taking into account their actual quality including any latent defects) are, to an acceptable standard, fit for all the purposes for which goods of that kind are commonly supplied, acceptable in appearance and finish, free from defects, safe and durable when measured by a standard which reflects the nature of the goods, their price, statements about the good as per their packaging, representations made about the goods and any other relevant circumstance. In Prestige Auto Traders Australia Ltd v Bonnefin [2017] NSWSC 149 at [132] N Adams J identified the manner in which s 54 should be applied in the following way:

“The relevant test in s 54(2) of the ACL (NSW) of whether or not goods are of “acceptable quality” is an objective one based on whether a reasonable consumer who was aware of the “defects” in the goods at the time of the supply would have considered them to be of acceptable quality. There was no issue taken that the determination of what is objectively reasonable for a consumer to expect is to be made taking into account the relevant information known as at the time of the trial, including “after-acquired knowledge”: Medtel Pty Ltd v Courtney (2003) 130 FCR 182; 198 ALR 630; [2003] FCAFC 151 at [66] and [70].’”

[36]   In Australian Competition and Consumer Commission v Jayco Corporation Pty Ltd [2020] FCA 1672 Wheelahan J said:

“[25] ... The standards under s 54(2) include that goods will be fit for all purposes for which goods of that kind are commonly supplied. This general standard of fitness for purpose is not dependent upon the consumer communicating any intended purpose to the supplier or relying upon the supplier’s skill or judgment. And, in relation to the general standard, it does not suffice that the goods will be fit for only some of those purposes.

[26] The standard of acceptable quality in s 54(2) has as its reference point a construct, namely the objective standard of a reasonable consumer fully acquainted with the state and condition of the goods, including any hidden defects of the goods. The reasonable consumer sits with an array of other hypothetical persons who have been recruited by the law and by reference to whom objective standards are evaluated: see, Healthcare at Home Ltd v The Common Services Agency [2014] UKSC 49; 4 All ER 210 at [1]- [4] (Lord Reed JSC). Such a person has been described as an anthropomorphic conception of justice that is and must be the court itself: see Davis Contractors Ltd v Fareham Urban District Council [1956] UKHL 3; [1956] AC 696 at 728 (Lord Radcliffe).

[27] The hypothetical question whether the reasonable consumer would have regarded the quality of the goods as acceptable is to be determined at the time of supply. However, the reference in s 54(2) to hidden defects has the consequence that for the purposes of determining that question, the reasonable consumer may be acquainted with information known at the time of trial: cf, Medtel Pty Ltd v Courtney [2003] FCAFC 151; 130 FCR 182 at [70] (Branson J, Jacobson J agreeing). The standard of acceptable quality prescribed by s 54(2) is not absolute, or a standard of perfection. It is tempered by what a reasonable consumer would regard as acceptable having regard to the several matters in s 54(3). These matters render the standard of acceptable quality elastic, and context specific: Contact Energy Ltd v Jones [2009] NZHC 2631; [2009] 2 NZLR 830 at [95] (Miller J). The significance of the components of the guarantee of acceptable quality will therefore vary with the circumstances of each case.”

28. Senior Member Sarginson (as the Deputy President then was) provided a useful summary of the applicable law in Crooks v Hyundai Motor Company Australia Pty Ltd [2023] NSWCATCD 29 at [61] to [63], writing (my underlining):

[61]    The relevant legal principles concerning the consumer guarantee provisions of the ACL have been discussed by the Appeal Panel in a number of cases, including Safi v Heartland Motors Pty Ltd t/as Heartland Chrysler [2016] NSWCATAP 80 (‘Safi’); and LSH Auto (Sydney) Pty Ltd v Sherman [2020] NSWCATAP 246 (‘Sherman’). Such authorities primarily deal with ss 54 and 259-263 of the ACL.

[62]    Legal principles applicable to the operation of ss 54 and 55 of the ACL and the remedial provisions under ss 259-263 are concisely summarised in Hutchinson v Central Coast Automotive Pty Ltd [2022] NSWCATCD 123 at [17]- [28]; and [30]-[58].

[63]    Such authorities set out the following principles:

(1)    Whether goods are of acceptable quality (and whether they have a “major failure”) involves an objective, not a subjective test. Subjective dissatisfaction with the goods is not sufficient to prove a breach of the consumer guarantee provisions.

(2)    A reasonable consumer, fully acquainted with potential faults, would understand that no purchase of goods is completely risk free, understanding that teething problems and other problems may be addressed under warranty.

(3)    The absence of an independent expert report goes to the weight of evidence, and the absence of such a report does not mean, of itself, that a consumer cannot establish that goods are not of acceptable quality (or have a “major failure”).

(4)    In respect of the purpose of the goods have been purchased for, “roadworthiness” means fit for use on the roads and is synonymous with “safe.”

(5)    A serious of faults or defects over a period of time may be sufficient to prove objectively that the goods are not of acceptable quality and have a “major failure.”

(6)    To obtain the remedy of a refund s 263 (4) of the ACL in respect of a breach of the consumer guarantee provisions (including ss 54 and 55 of the ACL) where the failure to comply with the guarantee is a “major failure” under s 260 of the ACL, the goods must have been rejected within a “reasonable time” of the consumer notifying the supplier that the goods have been rejected and the grounds of rejecting the goods (ss 259 (3) (a), 262 and 263 of the ACL).

29. The above authorities were cited and applied by Member Kinsey, sitting at first instance, in Simmons v Peter Warren Automotive Pty Ltd trading as Macarthur Ford Campbelltown and Ford Motor Company of Australia Pty Ltd trading as Ford Australia [2023] NSWCATCD 74.

30. Summarising those cases, the test to be applied in determining whether goods are of acceptable quality is objective, not a subjective test. The consumer’s personal dissatisfaction with the vehicle/good is not sufficient to prove a breach of the consumer guarantee provisions in the ACL. The objective test is taken from the perspective of a “reasonable consumer”. The question for the “reasonable consumer” is whether the goods in question have the qualities enumerated in 54(2) to an “acceptable standard”. The standard of acceptable quality is not absolute or a standard of perfection. It is elastic and depends on the circumstances of each case. Further, a reasonable consumer, fully acquainted with potential faults, would understand that no purchase of goods is completely risk free, understanding that teething problems and other problems may be addressed under warranty.

(b)   The guarantee as to fitness for a disclosed purpose

31. The applicants’ second claim asserted that the vehicle did not comply with the guarantee of fitness for purpose set out in s 55 of the ACL. That guarantee provides:

55 Guarantee as to fitness for any disclosed purpose etc.

(1)   If:

(a)   a person (the supplier) 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 reasonably fit for any disclosed purpose, and for any purpose for which the supplier represents that they are reasonably fit.

(2)   A disclosed purpose is a particular purpose (whether or not that purpose is a purpose for which the goods are commonly supplied) for which the goods are being acquired by the consumer and that:

(a)   the consumer makes known, expressly or by implication, to:

(i)   the supplier; or

(ii)   a person by whom any prior negotiations or arrangements in relation to the acquisition of the goods were conducted or made; or

(b)   the consumer makes known to the manufacturer of the goods either directly or through the supplier or the person referred to in paragraph (a)(ii).

(3)   This section does not apply if the circumstances show that the consumer did not rely on, or that it was unreasonable for the consumer to rely on, the skill or judgment of the supplier, the person referred to in subsection (2)(a)(ii) or the manufacturer, as the case may be.

32. For a supplier to be liable under the guarantee that goods are reasonably fit for a particular purpose, the consumer must establish that:

1. the supply occurred in trade or commerce;

2. the supply was not a sale by auction;

3. as a question of fact, either:

1. the consumer made known to the seller (or their representative) – expressly or by implication – that he or she was acquiring a particular good for a “particular purpose”, whether or not that purpose is one of the purposes for which the vehicle is commonly supplied for; or

2. the supplier represented that the goods were reasonably fit for a particular purpose;

4. the goods were not, as a matter of objective fact, “reasonably fit” for that purpose; and

5. the consumer suffered identifiable loss or damage because the goods were not reasonably fit for the disclosed purpose:

see, amongst other cases, Merck, Sharp and Dohme (Aust) Pty Ltd v Peterson [2011] FCAFC 128.

33. It is a defence to the claim that either the consumer did not rely on the skill or judgment of the supplier or the manufacturer (or their representative) in acquiring the good, or that it was unreasonable for the consumer to rely on their skill or judgment.

34. As Rein J noted in APS Satellite Pty Ltd v Ipstar Australia [2016] NSWSC 1898 at [86], the mere fact that a good was not working and was the subject of a service call does not lead, without more, to a conclusion that the good was not reasonably fit for purpose. The use of the word “reasonably” connotes that the good concerned would be fit to a “moderate” or “sensible” degree; “fairly” fit – i.e., that it would be fit enough to achieve that purpose, to a basic degree.

35. Further, if the disclosed purpose is expressed broadly and encompasses a number of different standards, then supplying goods that meet the principal purpose may comply with the guarantee even though other standards were not met. For example, a car that was purchased for the stated purpose of simply driving it from A to B would be fit for that purpose if it made the journey even though certain parts of the vehicle did not work along the way, unless it was expressly stated or implied by the buyer that the purpose also involved other relevant facets.

(c)   Remedies for breach of consumer guarantees

36. Part 5-4 of the ACL sets out the remedies that a consumer can seek against a supplier (see ss 259-266) or against a manufacturer/importer (see ss 271-273) in respect of the failure of supplied goods to comply with one or more of those guarantees. The remedies available against a manufacturer/importer are much more limited than the remedies available against a supplier. The precise remedies that are available depend on various factors, including whether the failure to meet the guarantee of acceptable quality is a “major failure” and whether the consumer has rejected the goods within rights permitted under the ACL. Various time limits apply to those rights.

37. I have considered the applicants’ claim in accordance with these principles.

Findings of fact

38. A large part of the parties evidence concerning the background facts of the matter was not the subject of any significant controversy. More controversial was the factual question concerning whether the vehicle was of acceptable quality or whether it complied with a particular purpose that the applicants had disclosed to Sinclair Ford. I will deal with the facts relating to those questions in detail below.

(a)   The background facts

39. I am satisfied by the evidence produced by the parties, and on the balance of probabilities, that the background facts of the matter are as follows:

40. The vehicle is a 2023-model Ford Explorer sport utility vehicle (SUV) that was manufactured on around 21 February 2023 in Ford’s Thailand assembly plant. The vehicle includes five doors and seven seats, four-wheel-drive, a 10-speed automatic transmission and a three litre, turbo-charged diesel motor. Relevantly to this proceeding, the vehicle had a “reverse brake assist” (RBA) feature, which is a supplementary driving aid that operates when the vehicle is in reverse and travelling at a speed of 2-12 km/h. The RBA feature uses rear-looking sensors to detect objects directly behind the vehicle and provides a warning to the driver to alert them to those objects. The feature can also apply the brakes on the vehicle for a short period of time, to bring the vehicle to a stop if the vehicle is about to impact with an object and the driver does not react in sufficient time.

41. Ms Deng’s acquisition of the vehicle was funded by ORIX Australia Corporation Limited (“Orix”) through an arrangement with Ms Deng’s employer, Insurance Australia Limited (“IAG”). The total price of the vehicle including GST was $78,418.91, or thereabouts. The vehicle had been ordered by IAG in July 2022, but it took a long time for the vehicle to be manufactured and delivered into Australia.

42. Ford Australia imported the vehicle into Australia. On 26 May 2023, Sinclair Ford reported to Ms Deng, IAG and Orix that the vehicle had been built but its arrival into Australia had been delayed by “significant port congestion”, and that the Ford system was showing an estimated arrival of the vehicle into Sinclair Ford’s dealership on 10 July 2023.

43. On arrival, the vehicle was then delivered to Sinclair Ford, who sold it to IAG for use as a new vehicle under a novated lease arrangement. The vehicle was therefore not sold by auction. Sinclair Ford supplied the vehicle to Ms Deng under that arrangement with IAG, on or around 26 July 2023.

44. As a car that has been novated to IAG, the vehicle is registered to IAG in the care of the applicants. As a new vehicle, the vehicle is covered by the Ford Express New Vehicle Warranty for a period of five years from the date of first registration, on 26 July 2023. That warranty provided coverage against defective factory materials or workmanship. In particular, the warranty provided that Ford Australia would, during the warranty period, at its option, repair, replace or adjust free of charge any part of the vehicle which it found to be defective in factory materials or workmanship under normal use and operation. While that warranty period does not expire until 26 July 2028, the applicants have not brought any claim in these proceedings under the terms of that warranty.

45. The vehicle was given a complimentary service inspection on 29 January 2024, by which time it had travelled 5355 km. The vehicle also received a field service action, including an “OTA” [over the air] manual update on 6 February 2024.

46. On 19 May 2024, Mr Su wrote to Sinclair Ford, stating in part:

Thank you for helping us fix the door problem of our Ford Everest Platinum 2022, early this year.

Though the vehicle engine performance is going well, we need your urgent attention for the electrical safety problem we have been suffering.

We had put up with this safety problem but no longer able to continue with it:

The problem is that the “Reverse Brake Assist” setting (see attached photo), can NOT be disabled, because it can’t be saved and it will be auto enabled again after the vehicle is switched back on next time.

Our drive path is on steep slope and it is connected to the busy road at the front.

Every time when I reverse the vehicle down the drive path, the “Reverse Brake Assist” always proactively and wrongly detect something and it automatically stops the vehicle all of sudden for me, despite there is no actual objects behind, but the slope is just steep.

The above is very dangerous especially [when] I am reversing out of drive path to the busy road. (Settings > Driver Assist > Reverse Brake Assist)

This rubbish “Reverse Brake Assist” has to be disabled, but due to the defect of the electrical system of this vehicle, the disablement can’t be saved and it will be enabled again after the vehicle is switched back on next time.

Please, can you please help me to resolve this problem asap? I suspect that this problem also exists in other Ford Everest Platinum 2022 vehicles. I have also updated the System software to the latest. Problem remains.

My vehicle Rego is … Purchased from you in July 2023.

If this problem can’t be fixed, we can hit the other incoming vehicles during reversing down our drive path. And if that happens, lives can be in danger and, Ford Australia can compensate us for millions or billions of dollar for lawsuit for ignoring this safety concern..

I look forward to your reply soon. …

47. Sinclair Ford responded the next day, 20 May, indicating that it would be in touch with Mr Su within a couple of days. Mr Su replied later the same day, writing (in part):

I believe this issue can impact the Everest fleet as long as they have this stupid rather than “smart” feature in the system.

It endangered safety and the ford team that delivered the so-called “Smart” software feature should get fired.

We can put up with the other stupid software feature like smart entry/door lock problems, but Not this one.

The “Smart” software features in this vehicle is a shambolic failure… Just tarnished the Everest brand, despite its mechanical and engine performance is going well…

Waiting for your next steps.

48. On 22 May, Sinclair Ford gave Mr Su a more substantive response, writing:

Unfortunately, we are unable to switch off the reverse brake assist feature as it contributes to the ancap safety rating of vehicle.

Chris [Jones, the service manager at Sinclair Ford] understands the struggles of your issue as he drives and Everest sport himself, and he lives on a steep driveway.

This is not something we can turn off permanently or fix for you.

This is how the feature is designed to assist.

I am sorry for this issue you find with the car however it is a design feature that can not be changed or removed.

49. The applicants then made a complaint to NSW Fair Trading about the vehicle on 31 May 2024, writing:

“We purchased Ford Everest Platinum 2022 from Ford Sinclair Penrith dealership in July 2023. The vehicle “Reverse Brake Assist” (RBA) will start beeping in panic mode and then forcefully [brake] , when I reverse back out our drive path, which is on slope (around 25-30 degree steep) and down connecting to main road, with incoming traffics. The RBA can be disabled via dashboard, but it is auto-enabled again when the vehicle is switched back on the next time. To us, this RBA feature needs to be disabled or, it can cause crash with incoming traffics. Because in that situation, I have to step on the gas to [brake] the RBA if I want to continue the reversing. I have to keep stepping on the gas to force the RBA to release the brake but I just don’t know when the RBA will release the brake – all these become the very dangerous guesswork. In that situation: if the RBA release the brake and I am still stepping on the gas, the car can accelerate the reverse and hit the incoming traffics if this runs out of control, it is a matter of when. Moreover, my drive path connecting to the main road, is also crossed the pedestrian path, with people and pets walking over. I emailed this problem to the Ford dealer – Sinclair Ford Kingswood, who replied they were unable to fix it. They used the [excuse] as they needed this feature to comply to the ANCAP rating. (See email) To resolve this problem and avoid further escalation to NCAT lawsuit, we require Ford to the following to settle the matter: – Fix this problem by disabling the RBA function to this vehicle, without any compromise to the warranty to this vehicle. Or if Ford can’t fix this problem, then it needs to: – Compensate us for the suffering of using this function since the day 1 of purchase of this vehicle at $200 per day or at the market rental rate of this vehicle to the date of resolution of this case, PLUS: – Full refund of our purchase of this vehicle We look forward to your assistance.”

50. On 21 August 2024, NSW Fair Trading wrote back to the applicants in response to that complaint, stating (relevantly):

“We raised your complaint with both Sinclair Ford and Ford Australia.

We contacted Mr Chris Jones, Service Manager for Sinclair Ford and Mr Ash Demirbas, Customer Experience Specialist for Ford Australia about your concerns.

Mr Jones told us:

–

   The vehicle is operating as per the manufacturer intended   

–

   There is workarounds for the concern, which the customer does not

   accept

Mr Demirbas told us:

–

   After investigation with Sinclair Ford the vehicle is operating correctly

–

   No further address has been offered

What was the outcome of your complaint?

An agreed resolution has not been reached.”

51. Sinclair Ford inspected the vehicle on or about 23 August 2024 – about 13 months after the applicants purchased the vehicle and two days after NSW Fair Trading sent the above response. By this time the vehicle had travelled a total of 9639 km, according to the odometer reading stated on Sinclair Ford’s service tax invoice. According to that invoice, which I accept as true in the absence of evidence to the contrary, Sinclair Ford’s technicians found sea salt layered on the underbody of the vehicle, causing rust. I will return to that issue, below.

52. On 10 October 2024, Harry Tachdjian of MTA Vehicle Inspections inspected the vehicle at the applicants’ home, conducting a “pre-purchase vehicle report” inspection. At the time the vehicle had travelled a total of 9983 km and had been in the applicants’ possession for about 14 ½ months. I will return to that report, below.

(b)   The alleged issues with the vehicle

1.   The Reverse Brake Assist (RBA) issue

53. The applicants assert that the RBA system gives false alerts and stops the vehicle unnecessarily when they reverse out of their driveway and onto the street outside their home, which is a busy suburban road. They assert that they must turn the RBA system off, or override it by firmly pressing the accelerator down (which they say is unsafe, given the road behind them), every time it does this. This is the only circumstance that the applicants have raised in respect of the system; they have not identified any other circumstance in which the RBA system has operated improperly. The applicants argue that the RBA system is problematic because the system is set to operate every time the vehicle starts even if it was deactivated, or turned “off”, on a previous journey in the vehicle.

54. The user manual for the vehicle contained several notes, precautions or warnings on the use of the RBA function. These included:

1. An instruction that the RBA functioned when in reverse and travelling at a speed of 2-12 km/h.

2. An instruction that the system only applies the brakes for a short period of time when an event occurs, and instructing the driver to act as soon as they notice the brakes apply to remain in control of the vehicle, noting that if the driver did not intervene the vehicle may start to move again.

3. A warning to use caution when reversing and when using the sensor system.

4. A warning that various factors, such as traffic control systems, inclement weather, external motors and fans, may affect the correct operating of the sensing system, which may cause reduced performance or false alerts.

5. A warning to not use the system with accessories that extend beyond the front or rear of the vehicle, such as a trailer hitch or a bike rack, as the system cannot make corrections for the additional length of those accessories.

6. A note that vehicle loading and suspension changes could impact the angle of the sensors and may change the normal detection zone of the system resulting in inaccurate measurement of obstacles or false alerts.

7. Instructions for switching the RBA function on and off.

8. A note that there could be instances where unexpected or unwanted braking occurs, adding that “Firmly pressing the accelerator pedal or switching the feature off overrides the system” in those cases.

55. The RBA function operates automatically when the vehicle is placed into reverse. When it operates, two images are shown on the screen on the vehicle’s dashboard: a view from the rear-facing camera at the back of the vehicle, overlaid with some computer-generated markings; and a composed image that imitates looking down onto the vehicle and its surrounds – which is presumably compiled from the sensors and cameras around the perimeter of the vehicle. Visual warning messages, such as “apply brakes” and/or an audible warning, operate if the vehicle detects an object within a pre-determined range of the vehicle. The vehicle operates the brakes automatically if a possible collision is detected.

56. Also displayed with those images is a soft (animated) toggle switch, which allowed the user of the vehicle to turn off the RBA system when reversing in a particular driving cycle. As the applicants have reported, that setting ceases to apply when the vehicle is turned off, and the RBA system is turned back on when the vehicle is re-started, which is the default setting for the system. I accept the respondents’ argument that the RBA system is designed to operate this way.

57. Mr Tachdjian conducted a road test of the vehicle on 10 October 2024, which checked (amongst other things) “Hill descent”, brakes and ABS activation. Noting no other issues with the vehicle, he made the following comments in respect of the reverse brake assist function (my underlining):

Brakes

Rear brake assist (RBA) appears to function correctly at time of inspection. Intermittent activation when reversing due to angle/pitch of driveway to road. Operator required to override safety feature by means of accelerating (this compromising the safety of the operator) or manually turn off the system. Suggest recalibration of sensors (if possible) or permanently deactivating system. Suggest further investigation by an authorised dealer for the best method of repair.

Those comments were accompanied by three photographs, showing the RBA display on the dashboard screen, and two views of the driveway at the applicants’ premises, including the vehicle crossover, the layback curb and the adjoining sections of road. In this regard, I note that:

1. the crossover is the section of the driveway which runs from the kerb to the property boundary; and

2. the layback curb for a driveway is an invert crossing adjacent to the crossover for the driveway. That is, it is a section of kerb adjacent to the crossover that has a flatter than normal profile, typically sloped from the driveway to the surface of the gutter at the edge of the road, to allow vehicles or pedestrians to easily cross the kerb.

58. Both of the driveway views photographed in Mr Tachdjian’s report showed that a black and yellow speed hump assembly had been installed in the street gutter, immediately alongside and parallel to the layback curb for the applicants’ driveway, for the full length of that layback curb.

59. I agree with the respondents’ arguments that the RBA system is detecting the flat roadway when the vehicle reverses down the applicants’ driveway onto the crossover, senses the flat roadway as an obstacle and applies the brakes. While not mentioned in the evidence, the black and yellow speed bump in the gutter at the layback of the applicants’ driveway may be exacerbating the problem, as it appears closer to the vehicle when it is reversing down the driveway.

60. I accept the respondents’ evidence that the automatic operation of the RBA system is a part of the design of the vehicle that has enabled it to obtain a certain ANCAP safety rating, and that disabling the system – either generally or in this particular vehicle – may have an adverse effect on the ability of the vehicle to maintain that safety rating.

61. Having weighed and considered the parties’ competing evidence on the issue, I am satisfied that the issue which the applicants have raised with the RBA system is an inherent part of the intended design and operation of the RBA system, and not a defect in the design or construction of the vehicle.

2.   The surface rust/corrosion issue

62. There is no evidence to establish the state or condition of the underbody of the vehicle when it was delivered to the applicants, in late July 2023. The first occasion when the rust/corrosion on components in the underbody of the vehicle was identified was on 23 August 2024, when Sinclair Ford inspected it (as described above).

63. Sinclair Ford’s service invoice for that inspection reported its findings, as follows:

CARRY OUT UNDER VEHICLE INSPECTION FOR RUST

inspected vehicle and found rust throughout underbody of vehicle, exhaust, suspension and rear diff.

found sea salt lay on underbody of vehicle causing rust.
Unable to find any manufacturing warranty defects

64. On 31 October 2024, Mr Jones prepared a vehicle report that expanded on his observations from inspecting the vehicle two months earlier, on 23 August. Mr Jones identified himself as the service manager for Sinclair Ford and as a qualified light vehicle automotive technician with 26 years of experience working with Ford vehicles. He has held his current position at Sinclair Ford for 15 years. He made his statement based on his own knowledge and from his review of the records at Sinclair Ford. Mr Jones stated in his report:

Evaluation of Concerns

On 23/08/2024 the Vehicle presented to Sinclair Ford for assessment of concerns relating to underbody corrosion effecting [sic] the Vehicle.

Upon inspection of the vehicle on a workshop hoist I can confirm that signs of surface corrosion were present on various components underneath the Vehicle such as exhaust and suspension componentry. In particular, the component showing the most amount of corrosion were untreated or unpainted items such as exhaust pipes and fastening washers. It should be noted that these components are untreated by design and are not indicative of any fault in the manufacture of the Vehicle.

It was also noted that the underbody of the vehicle was extensively covered by salt spray residue indicating operation or storage of the vehicle in a corrosive environment.

Conclusion

Based on my examination of the Vehicle it is my opinion that the surface corrosion identified was caused by exposure to saltwater environments without adequate maintenance of the vehicle being carried out such as washing the underbody with freshwater on a regular basis to remove any salt residue that may be present on the Vehicle. The fact that the Vehicle was presented with salt residue still present on the underbody of the vehicle is evidence of the vehicle not being maintained in the correct manner.

Furthermore, the Applicants have asserted previously that the salt residue seen under the Vehicle was pre-existing residue from when the Vehicle was originally sea freighted from the Ford manufacturing facility in Thailand to Australia. I find this assertion to be implausible given that the Vehicle was manufactured in February 2023 and the Vehicle arrived into Australia in July 2023 prior to delivery to the applicant’s later in that month. It is improbable that the salt residue noted by me in August 2024 has been present on the vehicle through a period of more than 12 months. It should also be noted that the corrosion present is surface corrosion only and has not given rise to any structural concerns relating to the underbody of the Vehicle

in conclusion to my assessment on this vehicle and in my opinion, the corrosion present on the Vehicle is not due to any defect in the manufacturing of the Vehicle but is due to external factors not related to original supply of the Vehicle.

Mr Jones was not challenged on this evidence, which I accept in full.

65. As referred to there, and as noted in the respondents evidence, the 2022 Everest owner’s manual contains the following advice under the heading “Cleaning the Exterior”:

CLEANING THE UNDERBODY

Flush the complete underside of your vehicle frequently. Keep the body and door drain holes free of packed dirt.

Rear suspension components and the complete underbody require regular cleaning with a power washer or a thorough rinse with a strong stream of water if the vehicle is operated in coastal areas, dusty or muddy environments. Rear leaf springs or other suspension components may emit squeaking or popping noises while operating the vehicle if particles, such as dirt, rocks or other debris, are present in the components.

Note: If you intend to park your vehicle for an extended period after cleaning the underbody, drive it for a few minutes before parking. This reduces the risk of corrosion of the brake discs, brake pads and linings.

66. After addressing other parts of the vehicle, such as the engine and exhaust system, the fuel system and the body panels – finding all of them to be in a good condition at the time of inspection – Mr Tachdjian wrote the following in respect of the underbody of the vehicle in his report dated 10 October 2024 – about seven weeks later (my underlining):

Underbody.

Advanced premature rust deposits to various [underbody] components consistent with the vehicle being exposed to a salty environment possibly during transportation or extended periods of unprotected storage. No evidence of off road use. Suggest further investigation by an authorised dealer for the best method of repair or replacement.

Those comments were accompanied by about 19 photographs of components in the underbody of the vehicle, many of which were showing orange coloured corrosion in various places.

67. The applicants live in West Pennant Hills, which is a suburb of Sydney that is about 30 km by road to the nearest coastline and about 10 km from the tidal parts of the Parramatta River. As noted above, the vehicle had travelled about 9639 km when it was inspected by Mr Jones in late August 2024, and 9980 km when it was inspected by Mr Tachdjian, two months later.

68. Most of the trafficable roads in the Sydney area are sealed bitumen. In the ordinary course of suburban life, they accumulate dirt and mud, as well as fuel, oil residue and soot from passing cars. They are also covered in water from time to time, including when it rains. The air and roads in coastal areas are also affected by sea salt from the nearby ocean. It was not clear on the evidence, however, whether that sea salt would penetrate inland as far as West Pennant Hills, or surrounding suburbs.

69. I am satisfied on the evidence that the rust reported by the applicants is light superficial corrosion that is mostly present on unpainted components, such as exhaust pipes and washers, and not structural in nature. It has not been proved to my reasonable satisfaction that this rusty corrosion was caused by salt from the manufacturing or transport process, which occurred some 14-18 months before Mr Tachdjian inspected the vehicle.

70. Based on the evidence that has been put before the Tribunal and hearing the arguments made by both parties, I am satisfied on the balance of probabilities that this rust has been caused by exposure to moisture, mud and grime through normal driving, potentially including driving in the coastal areas of Sydney, possibly exacerbated by failing to wash the underbody of the vehicle in accordance with Ford’s owner’s manual. To this end, I am satisfied that it should be expected that a motor vehicle that has been driving in and around metropolitan Sydney over nearly 10,000 kilometres in a period of 14-18 months will most likely accumulate minor surface corrosion of this nature. That is particularly the case on the unprotected metal parts of its underbody that are exposed to dirt, mud and grime, and moisture and water of the type that I have described above.

71. I therefore find on the balance of probabilities that the rust and corrosion which the applicants have complained of was caused by the conditions in which the vehicle was stored and driven during their ownership of the vehicle, and not by residual sea salt that may have been deposited onto the underbody of the vehicle while it was transported to Australia.

Consideration – applying the law to the facts as found

(a)   The fitness for purpose claim (ACL, s 55)

72. The applicants do not assert that they dealt with Ford Australia directly, or that they disclosed to Ford Australia that they were acquiring the vehicle at all, let alone for any particular purpose. They do not assert that Ford Australia made any representation to them to assert that the vehicle was reasonably fit for a particular purpose. Consequently, this part of their claim cannot succeed against Ford Australia.

73. The applicants’ documents did not provide any evidence to demonstrate that they told, or made known to, Sinclair Ford that they were purchasing the vehicle for any particular purpose. In their arguments before the Tribunal, however, the applicants asserted that they had disclosed to Sinclair Ford that they were purchasing the vehicle for the purpose of driving it in the Australian environment, which they say included reversing it down their driveway. They say it was not fit for that purpose.

74. It can be implied from the nature of the vehicle – as a motor car and a sports utility vehicle that was being sold with registration and compulsory third-party insurance that entitled an operator to drive it on Australian roads – that the vehicle was being acquired for the general purpose of driving it on Australian roads. It can also be implied from the four-wheel drive system that was part of the vehicle that it was potentially also being acquired for the purpose of operating it where four-wheel drive might be required. However it cannot be implied from those circumstances, without more, that the vehicle was being acquired in order to drive it in all parts of Australia, whether on roads or not, in all conditions. Additionally, the wording of the guarantee in s 55 does not contain an absolute promise that the vehicle would be absolutely fit for either of those purposes, in all conditions. A degree of reasonableness is required.

72. The applicants have failed to demonstrate on the evidence that the vehicle was not reasonably fit for either of those purposes. I find from this that the applicants have failed to demonstrate that the vehicle was not reasonably fit for a disclosed or represented purpose, within the meaning of s 55 of the ACL. This part of the applicants’ claim therefore fails.

(b)   The acceptable quality claim (ACL, s 54)

76. As noted in s 54(3) – set out above – the Tribunal must consider:

1. the nature of the goods;

2. the price of the goods;

3. any statements made about the goods on any packaging or label;

4. any representation made about the goods by the supplier or manufacturer; and

5. any other relevant circumstances relating to the supply of the goods,

in determining whether goods are of acceptable quality.

77. Turning to those factors, on the facts of this case:

1. The nature and price of the good: The vehicle is a new SUV motor vehicle of a type that is typically sold for the general purpose of being driven as a mode of transport or recreation. The vehicle was new at the time the applicant purchased it, having only been manufactured some 4-5 months earlier. The price of about $78,400 that was paid for the vehicle is a large amount of money, and suggests that the vehicle should have a high degree of quality and durability, consistent with a new car of that price. That expectation is tempered by the fact that the vehicle came with a 5-year warranty on parts and workmanship, which is indicative that the vehicle may suffer defects in these areas from time to time, coupled with an expectation that they will be rectified by the importer during that period, without charge to the owner of the vehicle.

2. Statements and representations: There is no evidence that any material statement or representation was made to the applicants about the vehicle. The only relevant representation that I am prepared to find to have been made about the vehicle was that it was covered by Ford Australia’s 5-year warranty, which would operate to cover any defective parts and workmanship in manufacture for a period of five years after the vehicle was first purchased.

3. Other relevant circumstances: The vehicle was purchased from a licensed motor vehicle dealer who specialised in selling new Ford vehicles. I infer from this that the sales staff and the service staff at the dealer were trained and well versed in (respectively) selling and maintaining Ford motor vehicles.

78. For the reasons that I have set out above, it has not been proved that the RBA system was defective or that the vehicle had been subjected to sea salt corrosion during its manufacture or transport to Australia. On that basis, it has not been proved that there were any latent or patent defects in the vehicle at the time that it was supplied to Ms Deng, which a reasonable consumer would need to consider under s 54(3).

79. Various dictionaries define “reasonable” to mean “fair”, as in not too high or too low – a sensible level. On this basis, a reasonable consumer would expect that a vehicle of this nature should be fairly or reasonably fit for its normal purposes, fairly or reasonably acceptable in appearance and finish, fairly or reasonably free from defects and fairly or reasonably durable, including when compared to other new vehicles on the market, and motor vehicles more generally. These matters lead me to the conclusion that a reasonable consumer who was fully acquainted with the state and condition of the vehicle (including any hidden defect in the vehicle), and who had purchased the vehicle from a licenced motor dealer, would expect that the vehicle would be of objectively reasonable quality and durability, in order to be acceptable.

80. I now consider the relevant factors in more detail.

–   Fitness for general purposes

81. When not suffering from the allege defects, the vehicle was generally capable of being driven and used as a motor vehicle for transport and recreation purposes. In the absence of any compelling evidence otherwise, I therefore find that the vehicle was as objectively fit for all the purposes for which vehicles of this kind are commonly supplied as a reasonable consumer would expect.

–   Acceptable appearance and finish

82. The evidence produced by the parties does not disclose that the vehicle had any relevant blemish in its appearance or finish at the time that it was sold, in July 2023.

83. Further, the evidence produced by the applicants shows that (with the possible exception of the corroded parts in the underbody that are dealt with elsewhere) there was no relevant defect in the appearance or finish of the vehicle when the vehicle was inspected by Mr Tachdjian, in October 2024. I infer from this that the outward appearance of the vehicle, as inspected by Mr Tachdjian, and which he comments favourably on in his report, was not dissimilar to the appearance and finish of the vehicle when it was purchased, even allowing for wear and tear over a 14-month period.

84. I therefore find that the vehicle was reasonably acceptable in appearance and finish at the time it was purchased by the applicant.

–   Freedom from defects at purchase

85. The evidence produced by the parties does not disclose that the vehicle had any relevant defects at the time that it was sold, in July 2023. In particular, the evidence does not disclose that there was any rust corrosion on the vehicle at the time of purchase, or that the RBA system was defective at that time.

86. I therefore find that the vehicle was free from defects at the time it was purchased by the applicant.

–   Safety

87. The applicants offered the opinion that the vehicle was not as safe as they would expect because of the particular operation of the RBA system on their driveway. However, the applicants have not demonstrated that they are appropriately qualified or an expert in motor vehicle safety. I therefore must ignore their opinions and form my own opinion on the matter guided by the mechanical expertise that has been produced by the parties.

88. There is no evidence that points to the fact that the vehicle was unsafe in any way at the time that it was purchased. As I have found the alleged defects did not exist at the time of purchase, I find that the vehicle was safe in all relevant respects.

89. I am also satisfied that the RBA system is itself inherently safe, notwithstanding the fact that the applicants experience “false alerts” when reversing the vehicle down their particular driveway. The RBA system contains two forms of override, which the applicants can use to prevent the system from operating in that particular circumstance. The method that involves pressing the accelerator firmly may not be particularly useable in the circumstances of the applicants’ driveway, given the proximity of their driveway to a busy suburban road, however the other method – which involves turning off the RBA system so that it does not operate over a journey, or for a short period until it is turned back on, is a sensible and usable feature in the applicants’ circumstances.

90. Having regard to the presence of those override methods, I find that the RBA system was sufficiently safe in the mind of a reasonable consumer.

–   Durability

91. It has not been alleged that the vehicle was less durable than a reasonable consumer would consider acceptable in the circumstances of the present case. Nevertheless, I note that many of the underbody parts which the applicants have identified as being corroded by rust are replaceable parts that are designed to be replaced when they wear out or become unsafe or ineffective in performing their particular role in the operation of the vehicle. That includes circumstances where they might become unacceptable corroded by rust.

92. In these circumstances, I find that the vehicle was sufficiently durable in the mind of a reasonable consumer.

–   Findings on acceptable quality

93. Having considered the matters described above against the criteria in s 54 more generally, I find that a reasonable consumer who was fully acquainted with the state and condition of the vehicle at the time it was supplied to Ms Deng (or the applicants, more generally) would have regarded the vehicle as being acceptable.

94. On this basis it is not necessary for me to consider the defence that the respondents have raised under s 54(6).

95. I therefore find that the vehicle satisfied the guarantee of acceptable quality in s 54 of the ACL when it was supplied by Sinclair Ford to the applicants. Consequently, this part of the applicants’ claim also fails.

The appropriate remedy

96. As I have found that the vehicle did not fail to satisfy the consumer guarantees of acceptable quality and fitness for purpose contained in ss 54 and 55 of the ACL, it follows that the applicants are not entitled to recover any remedy from either respondent. The Tribunal therefore declines to make the orders sought by the applicants.

Conclusion and orders

97. For these reasons, the applicants have failed to demonstrate to the Tribunal to the civil standard, being the balance of probabilities, on the material that has been put before the Tribunal that there are grounds to make the orders sought in the application. The application must therefore be dismissed. I am satisfied pursuant to s 79U of the FT Act that these orders will be fair and equitable to all the parties to the claim.

98. The order made by the Tribunal is therefore as follows:

1. The application is dismissed because, having considered the material put before it, the Tribunal is not satisfied to the civil standard, being the balance of probabilities, that there are grounds to make the orders sought.

**********

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: 21 May 2025