Felice v Mercedes-Benz Group Australia/Pacific Pty Ltd

[2024] NSWCATCD 12

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Felice v Mercedes-Benz Group Australia/Pacific Pty Ltd [2024] NSWCATCD 12

Hearing dates:

13 December 2023

Date of orders:

08 January 2024

Decision date:

08 January 2024

Jurisdiction:

Consumer and Commercial Division

Before:

P French, Senior Member

Decision:

(1) Shane Felice must return Mercedes-Benz A 250 4Matic (VIN W1K1771472J344958) to Mercedes-Benz Group Australia/Pacific Pty Ltd by delivering it to Tynan Motors Pty Ltd, and do all things necessary to transfer ownership of that motor vehicle to Mercedes-Benz Group Australia/Pacific Pty Ltd, by 31 January 2024.

(2) Mercedes-Benz Group Australia/Pacific Pty Ltd must pay Shane Felice $71,432.30 by 31 January 2024 in accordance with the following directions:

(i) the amount owing to Mercedes-Benz Financial Services Australia Pty Ltd in relation to the dealer-related finance contract and any fees and charges associated with the early termination of that contract must be discharged first,

(ii) then any balance remaining to be paid to Shane Felice.

(3) If there are any difficulties with compliance with these orders any party may apply to the Registrar to have the application listed for directions.

Catchwords:

CONSUMER CLAIMS – Fair Trading Act 1987(NSW) – Australian Consumer Law (NSW) – consumer guarantees in relation to the supply of goods – guarantee relating to the supply of goods by description – major failure – where motor vehicle purchase funded with dealer related finance – form of orders

Legislation Cited:

Australian Consumer Law (NSW), ss 54, 56, 259, 260, 261, 262

Fair Trading Act 1989 (NSW), ss 28, 79N

Category:

Principal judgment

Parties:

Shane Felice (Applicant)
Mercedes-Benz Group Australia/Pacific Pty Ltd (First respondent)
Tynan Motors Pty Ltd (Second respondent)

Representation:

Shane Felice (self-represented)
C Poyser, in house Counsel (First respondent)
R O’Connor, New Car Sales Manager (Second respondent)

File Number(s):

2023/00378505

Publication restriction:

Nil

REASONS FOR DECISION

Introduction

1. This application arises from a dispute between the parties in relation to the supply to the applicant by the first respondent of a motor vehicle which the applicant contends is not as described in the contract for sale. The first respondent is the designated manufacturer and Australian distributor of the motor vehicle, but it is also the “dealer” and contracting party under the contract for the sale of the motor vehicle. The second respondent is a retail “agent” of the first respondent and not itself a party to the contract for sale. Specifically, the applicant complains that the motor vehicle was not supplied with a “U59 Seat Comfort package” (the seat package). In his application, the applicant sought three remedies in the alternative in disposition of the dispute. His preference is an order pursuant to s 79N(b) of the Fair Trading Act 1987 (NSW) (FT Act) that would require the first respondent to retrofit the seat package to the vehicle or failing that an order pursuant to s 79N(g) of that Act which would require the first respondent to replace the motor vehicle with an equivalent vehicle which is fitted with the seat package. However, the first respondent advised that neither order could be complied with as the seat package is not available. Consequently, the only remedy practically available to the applicant is his third alternative, which is an order pursuant to s 79N(h) of the FT Act that would require the first respondent to accept the return of the motor vehicle and to refund him the purchase price he paid for it. The hearing proceeded on this basis. This application was made to the Tribunal on 27 August 2023 (the application).

2. For the reasons set out following I am satisfied that the first respondent contravened the consumer guarantee in relation to the supply of goods by description (s 56 of the Australian Consumer Law (NSW) (ACL)) when it failed to supply the motor vehicle to the applicant fitted with the U59 Seat Comfort Package. This is, in terms, a major failure to comply with the guarantee by operation of s 260(1)(b)(i) of that law. That being the case, pursuant to s 259(3)(a) of the ACL, the applicant was entitled to reject the motor vehicle. I am satisfied that he did so within the rejection period specified in s 262 of the ACL. Consequently, and in accordance with s 263 of the ACL, the first respondent must accept the return of the motor vehicle and refund the applicant its purchase price.

3. However, this is a case where the applicant’s purchase of the motor vehicle was funded (either in full or part) by a dealer related finance provider, Mercedes-Benz Financial Services Australia Pty Ltd. Consequently, that loan contract must be discharged as an incident of the outcome of the proceedings. Unfortunately, this issue was not identified at the first listing of the application. Consequently, Mercedes-Benz Financial Services Australia Pty Ltd was not joined as a party to the proceedings, and the parties did not attend the hearing prepared to deal with this issue. I have therefore attempted to craft a money order to address this issue. If this is insufficient or ineffective for some reason, any of the parties may apply to the Registrar to have the matter relisted for directions.

Procedural history

4. The application was first listed before the Tribunal, differently constituted, in a Group List for Conciliation and Hearing on 27 September 2023. The consumer attended that listing of the application in person. Ms C Poyser, In-House Counsel, attended the hearing via AVL on behalf of the first respondent. Mr R O’Conner, New Car Sales Manager, attended hearing on behalf of the second respondent. In accordance with the Tribunal’s usual practice where all parties are present at the first listing of an application the Tribunal attempted to assist the parties to resolve the dispute cooperatively by Conciliation. Those efforts were not successful. Consequently, the application was adjourned to a Special Fixture Hearing and directions were given to the parties for the filing and exchange of the documentary evidence that they intended to rely on for the final hearing.

5. I note that at that listing of the application, either on application by the applicant or on its own motion (it is not clear which) the Tribunal amended the application as recorded in direction 4:

4.   The application is amended to also allege a breach of the Australian Consumer Law (NSW) (“ACL”) s 56 Guarantee relating to the supply of goods by description, with a remedy in damages ACL s 236 and 259.

It is not clear to me what is meant by the references to “damages” and s 236 of the ACL, as none of the remedies sought by the applicant in his application would engage those provisions. In any event, in its terms, the amendment is intended as additional to the claim already stated by the applicant in his application as is indicated by the words “to also allege”. It therefore does not inhibit me from dealing with the application in the manner I have described above.

Evidence and hearing

6. Both parties have complied with the Tribunal’s procedural directions for the filing and exchange of their evidence. The consumer’s bundle, filed on 10 October 2023 was marked Exhibit A1. I note that this bundle includes a Statement dated 8 October 2023 given by Victoria Felice, who is the applicant’s wife. The first and second respondent filed a joint bundle of documents on 27 October 2023 which was marked Exhibit R1. This contained the following:

1. Statutory Declaration given by Stelios (Steve) Chilas, Sales Consultant, Tynan Motors Pty Ltd, dated 20 October 2023,

2. Statutory Declaration given by Robert O’Connor, New Car Sales Manager, Tynan Motors Pty Ltd, dated 20 October 2023.

7. Mr Felice attended the hearing in person and gave oral evidence under oath. He did not call any other witness. Ms C Poyser attended the hearing on behalf of the first respondent and presented both respondents’ cases. Mr Robert O’Connor, attended the hearing on behalf of the second respondent and gave limited oral evidence under affirmation. No other witnesses were called. The parties had the opportunity to present their respective cases, to ask each other questions, and to make final submissions to the Tribunal.

Material facts

8. The dispute concerns the first respondent’s supply to the applicant of a Mercedes-Benz A 250 4Matic Sedan (VIN W1K1771472J344958). As I have already noted above, the “Dealer” supplier of that motor vehicle under the contract for sale is Mercedes-Benz Group Australia/Pacific Pty Ltd. The second respondent retailer is defined as the ‘agent’ of the first respondent in relation to the sale and is not itself a party to the contract.

9. In early 2022, the applicant was interested in purchasing a new Mercedes-Benz A250 4 Matic Sedan. He had conducted on-line searches for this vehicle, and researched its features.

10. On 1 March 2022 the applicant and his wife, Ms Victoria Felice, attended the second respondent’s sales showroom to inspect this model vehicle. They were attended to by Mr Stelios (Steve) Chilas, Sales Consultant. They inspected and test drove a demonstrator Mercedes-Benz A250 4Matic which was fitted with the U59 Seat Comfort Package. The applicant describes this feature as being ‘electronic seats with a memory function’. They determined to purchase an equivalent vehicle. The first respondent did not have an equivalent new vehicle in stock. The applicant indicated to Mr Chilas the example that he had seen on-line as available for purchase. It was this vehicle that became the subject of the contract for sale.

11. The parties give different accounts of what was agreed in relation to that vehicle’s specifications.

12. Mr Felice did not provide a written statement but gave oral evidence which is conveniently summarised on his NCAT application form as follows:

I purchased the A250 Mercedes car from Tynan Motors … on 1 March 2022 having relied upon verbal representations made by Tynan that the car had electronic seats, matching the demonstration model I drove. This is something that I specifically requested, with my wife present, and I was assured that the car I was purchasing had electric seats. MB allege that Tynan did not make such representations. However, both my wife and I were present, on both occasions when these were made. … Only after I picked up the car was I advised that the car did not have electronic seats because of supply shortages. Tynan were going to follow up and I have text messages supporting this, which is contradictory to MB purporting that I was informed by Tynan before I purchased the car that electronic seats were not included in my car. I would not have purchased the car had I known it did not have electric seats as this was an extremely important factor for me, especially given the price of the car. My wife also drives the car who is 5ft 2in, compared with my nearly 6ft. It is ludicrous that I would spend such an amount on a car for this purpose with only manual seats….

13. In her Statement dated 8 October 2023, Ms Victoria Felice states:

I … attended the Tynan Mercedes office with my husband, the Applicant on 1 March 2022. I was present when Steve Chilas (the sales agent at Tynan) offered the Applicant a test drive of a Mercedes Benz A250, being the car the Applicant was interested in purchasing. The car in question had electronic seats, with memory function.

After the test drive, the Applicant told Steve Chilas that he was interested in proceeding with the purchase of a Mercedez Benz A250. The Applicant had found a Mercedes Benz A250 on the Mercedes website, which he was interested in purchasing. The Applicant asked Steve Chilas to confirm that the car the Applicant had found included the electric seats with memory function. This was an extremely important aspect for purchasing a car, given the height difference between myself and the Applicant, and the fact that I would also be driving the car.

Steve Chilas then checked the stock on the website and referred to the details of the car. Steve Chilas confirmed it included electric seats with memory function, and said it had all the features of, and was exactly the same as the car the Applicant had test driven.

Steve Chilas, the Applicant and myself, then walked around the dealership looking at seat type in several models, to show the Applicant the style of seat in the car the Applicant was interested in purchasing. The Applicant then proceeded to sign the contract based on the representations made by Steve Chilas.

The above is, to the best of my knowledge, a true and correct description of events.

14. In his Statutory Declaration made on 20 October 2023 Mr Stelios (Steve) Chilas states as follows:

…

c) On 1 March 2022, the Applicant and his wife visited Tynan Motors. Together, the three of us test drove an Iridium Silver Mercedes-Benz A250 with leather seats and standard wheels.

d) A Mountain Grey Mercedes-Benz A250 vehicle was available for delivery in April 2022, however, it had different seating material to the leather seating in the vehicle the Applicant had test driven (Dinamica microfibre). For that reason, we walked around the dealership looking at seat material in other models, so that the Applicant could see the Dinamica microfibre.

e) The Applicant proceeded with the purchase of the Mountain Grey Mercedes-Benz A250 with the Dinamica microfibre seating material. His chosen vehicle also had upgraded specification wheels, which were not features of the vehicle he had test driven. Given the difference in colour, seating material and wheels between the vehicle that was test driven and the vehicle purchased, I would not have made the following statement that appears in Ms Victoria Felice’s statement of 8 October 2023:

“Steve Chilas … said it has all the features of, and was exactly the same as the car the Applicant had test driven”.

f) I prepared the contract for the Applicant’s vehicle on my computer. I then printed it and we went through the contract together in hard copy format. After we had done so, both the applicant and I signed the contract.

g) I do not recall any discussion of the memory seat feature with the Applicant and is wife on 1 March 2022.

h) On 23 April 2022, the Applicant took delivery of the vehicle. I do not recall whether he queried the omission of memory seats.

i) On 26 April 2022, I sent the Applicant a text message to see how he was enjoying his new vehicle. He seemed to be enjoying the vehicle, but concerned by the fact that he had paid for but not received memory seats. The Applicant was not charged for memory seats.

15. In his Statutory Declaration dated 20 October 2023, Mr O’Conner states as follows with reference to the present dispute:

…

b) Our records indicate that on 1 March 2022, the Applicant test drove vehicle with commission number …. (Iridium Silver A250) with Steve Chilas.

c) I was present at the dealership, but not involved in the test drive or discussions regarding the purchase of the vehicle on 1 March 2022.

d) At handover, what generally occurs is an unveiling of the vehicle, after which time the purchaser sits in driver’s seat and sales consultant sits in passenger seat and an overview of the vehicle is provided for approximately half an hour. During this time, a customer is assisted to adjust their seating position, the mirrors and steering wheel position.

e) If there had been any concerns at the time of delivery of the vehicle, usual practice would have been for the staff handing over the vehicle to escalate any concerns to me. I do not recall being involved.

…

16. The contract for sale has four parts. The first part is constituted by the ‘disclosure of key terms’ as required under s 47A of the FT Act. Those disclosures are not presently relevant. ‘Part A’ of the contract is the ‘Order Form’ which describes the motor vehicle which is the subject of the purchase. For present purposes it is sufficient to note that it itemises the supply of a ‘A 250 4MATIC Sedan with a ‘Mountain Grey Metallic’ exterior colour and a ‘Black ARTICO leather/DINANICA Microfibre’ interior colour. The supply specification includes a number of ‘Factory Options’ including ‘RVK 19” M/S Black Alloy Wheels’ and ‘873 Heated front seats’. It also includes ‘Additional Products and services’ being a ‘NSW001 – Personalised Plate (NSW) – Premium Black and White’. The total cost of the motor vehicle recorded in Part A of the contract is $72,451.30. However, this includes a $601.00 Registration Fee and $418.00 for Compulsory Third Party Insurance. Deducting those amounts, the purchase price was $71,432.30. The final page of Part A of the contract includes the following terms:

Representations and Undertakings

The Purchaser warrants that it has not relied upon any verbal representations or undertakings made by any of the Dealer’s representatives, employees or officers, except as specifically set out in this Contract. The Dealer strongly recommends that the Purchaser list any representations or undertakings in the space below that the Purchaser intends to rely on.

[the space below is blank]

…

The Purchaser offers to purchase from the Dealer on the terms and conditions specified in this Contract in relation to the motor vehicle described above, including the optional equipment, service solutions and accessories (if any) (referred to the Vehicle in this Contract). The terms and conditions attached to this document form part of this Contract.

THIS IS A LEGALLY BINDING CONTRACT

This contract is entered into and is effective as of the date the Purchaser signed this Contract and the Dealer signs and accepts the Contract, by electronic means or otherwise.

Below these statements is a signature panel which is signed by the applicant and behalf of the first respondent and dated 1 March 2022.

17. Part B of the contract sets out the ‘Terms and Conditions of Sale’. The following terms are relevant for present purposes:

1.   Formation

This contract comprises Part A: Order Form; Part B: Terms and Conditions of Sale; and Part C: Cooling Off Notice.

2.   Agreement to Purchase

The Purchaser agrees to purchase the Vehicle (including any Optional Equipment, Service Solutions and Accessories) as described in Part A from the Dealer, pursuant to the terms and conditions set out in this Contract...

…

17.   No Misdescription

The purchaser has 48 hours after taking delivery of the Vehicle to check that the Vehicle is in all respects in accordance with the description contained in Part A.

…

24.   Entire Contract

This Contract contains the entire understanding between the parties as to the subject matter contained in it. All previous agreements, representations, warranties, explanations and commitments, expressed or implied, affecting this subject matter are superseded by this Contract and have no effect.

25.   Variation

Unless otherwise stated, this Contract can only be varied with the written agreement of both parties.

18. Part C of the contract contains the ‘Cooling Off Notice’ required because the motor vehicle was purchased with dealer-related finance. It is not presently relevant.

19. There is then a 3 page document that sets out the detailed specifications for the motor vehicle. This document repeats the exterior and interior colour specifications and the optional equipment described in Part A of the Contract. It also itemises the ‘Standard Equipment’ with which the motor vehicle is supplied. This includes: “59 Seat Comfort Package”.

20. The applicant took delivery of the motor vehicle on Saturday 23 April 2022 at the second respondent’s show room. The applicant contends that he met Mr Chilas at 1pm. The applicant gave evidence under oath that he immediately noticed what he considered to be the omission of the ‘electric seats’ and raised this with Mr Chilas. He gave evidence that Mr Chilas responded by saying words to the effect that ‘these were not included in the car and that he should check the contract’. He contends that he disputed this with Mr Chilas and said that he would check the contract.

18. On Tuesday 26 April 2022 Mr Chilas sent a text message to the applicant to enquire about his experience of the motor vehicle. The text message exchange that this gave rise to is set out following:

Mr Chilas:

Hi Shane, How was the car over the weekend? Regards Steve

Mr Felice:

Hi Steve, car drives like a dream. Made life a lot easier having a car with childseats again. Just wanted to ask again about the electric seats as I believe the seat comfort package was included on (sic) the price.

Mr Chilas:

Hi Shane, What MB Australia have done is only charged for the heated seats in the Seat Comfort package. That I am 100% certain of. In fact in the invoice that I have just emailed to you, the heated seats are down as included.

Take a look …

With the semi conductor shortages globally MB are removing charges for items that aren’t available. That is why your vehicle was that price.

Other manufacturers are adjusting their prices when items are not available. Regards Steve

Aren’t adjusting their prices.

22. The applicant continued to pursue his complaint about the absence of the electric seats from the vehicle over succeeding weeks, as it evidenced by emails to the second respondent dated 6 May 2022, 9 May 2022, and 8 June 2022.

23. In his email to Mr O’Connor of 6 May 2022 the applicant included a web-link to the Mercedes-Benz website description of the ‘seat comfort package’. A screen shot of that link is in evidence. It states as follows:

Seat Comfort Package

• Fully electrical front seats with memory functions

• Heated front seats

• Passenger mirror with reverse parking position.

In the same email he states in part:

Further to our discussion the other day with regards to the seat comfort package, I’ve reviewed the contract and the inclusions for the car.

The inclusions listed specifically state that “U59 – Seat comfort package” is included. This in turn includes fully electrical front seats with memory function, which is stated and described on the Mercedes-Benz Website link as follows [as set out above]

When the contract was entered into, I was not advised that I would not in fact be receiving this in my package and if this was the case, it should not have been listed as an inclusion as this was misleading. Given the fact that I specifically asked if the electric seats were included at the time the contract was entered into I fully expected this to be the case.

The purchase price has not been adjusted to take this into account and when I raised it with you after I had collected the car, you advised that this was not included. Given the above, this is not the case and I have not received the car that was described in the paperwork or described by you when I entered into the contract.

As you are probably aware, the Australian Consumer Law provisions apply to the sale of products sold for personal use, which come with automatic guarantees that cannot be excluded by contract.

Under these provisions, because the car does not meet the description guarantee, I am entitled to a repair, replacement or refund. As such, I would like the car to have what I have paid for, being the electrical front seats with memory function.

…

24. On or about 5 July 2022 the applicant lodged a complaint with NSW Fair Trading’s Automotive Unit. That complaint was not finalised until 24 March 2023. In its letter finalising the complaint NSW Fair Trading advised the applicant that it had received the following response from the first respondent:

…

MBAuP advised Fair Trading:

The DSC Seat Comfort Package (DSC Package) supplied with your vehicle was in accordance with the specifications current at the time of entering in the contract for sale.

Refer to the attachment re MBAuP Response re DSC Seat Comfort Package (DSC Package)

The U59 Seat Comfort Package supplied with your vehicle was in accordance with the specifications current at the time of entering in the contract for sale.

Refer to the attachment re “MBAuP response re U59 Seat Comfort Package”.

MBAuP considers that your vehicle includes both the DSC Package and U59 Seat Comfort Package as described in your Contract.

MBAuP is unable to retro-fit electric seats into your vehicle.

…

25. I note that on behalf of the first respondent, Ms Poyser made similar submissions to the Tribunal in these proceedings. However, the documents referred to in the first respondent’s advise to NSW Fair Trading are not in evidence. Ms Poyser’s submissions are in this regard bare assertions unsupported by objective evidence.

26. Following NSW Fair Trading’s closure of his complaint the applicant engaged solicitors to act for him in relation to the dispute. By letter of demand served on the second respondent on 21 April 2023 the applicant’s solicitors:

1. described the supply of the motor vehicle,

2. asserted that Mr Chilas made representations to the applicant on 1 March 2022 to the effect that the motor vehicle he was purchasing would have the same electronic seats as the demonstration model that he had test driven,

3. referred to description of the motor vehicle in the contract for sale as including the “U59 – Seat Comfort Pack” and set out the inclusions in this package as itemised on the first respondent’s website,

4. asserted that the applicant decided to purchase the motor vehicle based on Mr Chilas’ representations and the inclusion of the “U59 Seat Comfort Pack”, and that he would not have purchased the motor vehicle if he had known that it would not be included,

5. outlined the applicant’s rights and remedies under the Australian Consumer Law, by reference to s 56, 259, and 260 of that Law, and additionally, alleged that the second respondent’s conduct had been misleading and deceptive contrary to that Law, and

6. requested the second respondent to resolve the dispute in light of these considerations.

27. By letter dated 31 May 2023 the first respondent replied to this letter. In that letter the first respondent denies that Mr Chilas made a representation to the applicant that the motor vehicle to be supplied with electric seats and asserts that the “Vehicle fully matches the description in the contract of sale”. The letter goes on to state:

…

U59 – Seat Comfort pack

MBAuP sells a number of vehicle models with a range of different inclusions and options. A number of models have Seat Comfort Packages, and the inclusions in package can very across models. Further, inclusions in packages may vary from time to time.

The DSC Package was not expressly listed as an inclusion in the Contract with your client as the DSC Package is standard equipment in the A250 model.

The DSC Package as shown in the pricing file documents relevant at the time your client entered into the Contract (A-Class Sedan AU Price File – Nov 2021) (Pricing File) (attached) did not include a line item for electric seats.

Your client’s Vehicle includes the U59 Seat Comfort Package which is made up of:

• Front passenger seat height adjustment;

• Seat cushion angle adjustment for the driver’s and front passenger seat;

• Driver’s seat cushion angle adjustment for improved seating comfort thanks to a 60mm longer supporting surface for thighs; and

• Special seat design

The U59 Seat Comfort Package for your client’s Vehicle does not include electric seats. The U59 Seat Comfort Package available in Australia has never related to the provision of electric seat functions and we are not aware of any documentation to contradict this.

Accordingly, your client’s Vehicle has the U59 Seat Comfort Package that applies to that model and there were no representations that the package included electric seats.

Reliance

You assert that your client relied on the alleged representations purchasing the Vehicle.

However, Page 5 of the Contract sets out a section for any verbal representations or undertakings made by the agent to be included in the Contract, and the customer warrants that they have not relied on any verbal representations or undertakings, except as specifically set out in the Contract. This section strongly recommends that customers include any such representations that they seek to rely on. There are no inclusions in this section of your client’s Contract.

Accordingly, your client has warranted that he did not rely on any verbal representations.

Further:

• As there is no mention of electric seats in the Contract and your client has not produced any materials he was provided that state the Vehicle came with electric (sic), and no verbal representations to the contrary are listed, there is no reasonable basis for your client to have believed he would have receive a vehicle containing electric seats.

• Clause 2 of your client’s Contract stipulates that he agreed to purchase the Vehicle as described in Part A

• Clauses 17 and 24 of your client’s contract stipulate that the Contract is the entire understanding between the parties and outline the purchaser’s obligations to confirm within a specified time that the Vehicle is in accordance with the description in Part A.

…

28. I note that Ms Poyser also made submissions to this effect at the hearing. However, the first respondent filed no evidence of the ‘pricing file documents’ or the ‘Australian’ content of the U59 Comfort Seat Package. What was said about their contents is bare assertion only.

29. The respondents rely upon a ‘Vehicle Delivery Form’ which they contend was completed and signed by Mr Chilas as part of the handover of the vehicle to the applicant. It is time stamped 8:12:44 (+10:00) on 23 April 2022. The document purports to confirm that the dealer representative has provided specified explanations to the purchaser about the operation of various features of the motor vehicle. None of these features specially refer to the seat functions. There are “instrumentations and dashboard controls” and “full operating instruction (as per Owner’s manual)” itemised in the checklist, but neither are checked as having been explained. Other than that the applicant attended the second respondent’s premises on 23 April 2022 to take delivery of the motor vehicle, which is not in dispute, it is difficult to see what probative value this document has for the respondents’ case. In any event the applicant denies that he attended at the time specified on this form and he denies that the signature that appears in the signature panel above his name on this document is his signature.

30. The respondents also rely upon a document headed “Dynamic List Display” printed on a date in October 2023 which it is contended contains the “characteristics” of the demonstrator vehicle that the applicant test drove on 1 March 2022. I understand that this document is relied on to indicate that the demonstrator vehicle did not contain electric seats as asserted by the applicant. However, “front seats electric” is itemised in the “value description” column indicating their presence in the vehicle. A “memory package” is also itemised in the value description column.

Contentions of the parties

Consumer

31. The consumer’s case in short summary is that the first respondent contravened the consumer guarantee relating to the supply of goods by description contained in s 56 of the ACL by failing to supply the motor vehicle to him with a U59 Seat Comfort package that included electronic seats with a memory function. He contends that this entitled him to reject the motor vehicle, to return it, and to obtain a refund of its purchase price.

Respondents

32. The first respondent’s case in short summary is that the supply of the motor vehicle never incorporated electronic seats with a memory function, and that no such representation was made to the applicant by the second respondent. In the alternative, the first respondent contends if such a component was included in the description of the motor vehicle, the failure to supply that component is not sufficiently significant as to constitute a major failure to comply with the guarantee relating to the supply of goods by description, and consequently, that the applicant was not entitled to reject the motor vehicle on this basis. In the further alternative, the first respondent contends that even if there was a major failure to supply the motor vehicle according to its description, the applicant failed to reject the motor vehicle within the rejection period, and consequently, that the remedy of return and refund is not available to him.

Jurisdiction

33. There is no issue that the Tribunal has jurisdiction to deal with this application as a consumer claim in accordance with the provisions of Part 6A of the FT Act. The consumer relies upon the ACL as providing his cause of action and remedy. The ACL is made part of the law of NSW by operation of s 28 of the FT Act.

Applicable law

34. Chapter 3, Part 3.2, Division 1, of the ACL(NSW) contains several specific protections for consumers in trade and commerce, known as the “consumer guarantees”.

35. Subdivision A contains guarantees in relation to the supply of goods. This includes, in s 56, a guarantee relating to the supply of goods by description. It relevantly provides:

56.   Guarantee relating to the supply of goods by description

(1)   If:

(a) a person supplies, in trade or commerce, goods by description to a consumer; and

(b) the supply does not occur by way of sale by auction;

there is a guarantee that the goods correspond with the description.

…

36. Part 5.4 of the ACL sets out the remedies that are available to a consumer in relation to a contravention of a consumer guarantee. Division 1, Subdivision A, deals with action against suppliers of goods. In this respect, s 259 of the ACL provides, relevantly:

259   Action against suppliers of goods

(1)   A consumer may take action under this section if:

(a) a person (the supplier) supplies, in trade of commerce, goods to the consumer; and

(b) a guarantee that applies to the supply under Subdivision A of Division 1 of Part 3-2 (other than sections 58 and 59(1)) is not complied with.

(2)   If the failure to comply with the guarantee can be remedied and is not a major failure:

(a) the consumer may require the supplier to remedy the failure within a reasonable time; or

(b) if such a requirement is made of the supplier but the supplier refuses or fails to comply with the requirement, or fails to comply with the requirement within a reasonable time – the consumer may:

…

(ii)   subject to s 262, notify the supplier that the consumer rejects the goods and of the grounds for the rejection.

(3)   If the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may:

(a) subject to section 262, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection; or

…

…

37. Section 260 of the ACL explains the circumstances in which a failure to comply with a consumer guarantee in relation to the supply of goods is a major failure. It provides, relevantly:

260   When a failure to comply with a guarantee is a major failure

(1) A failure to comply with a guarantee referred to in section 259(1)(b) that applies to a supply of goods is a major failure if:

…

(b) the goods depart in one or more significant respects:

(i) if they were supplied by description – from that description;

…

38. Section 261 of the ACL explains how suppliers may remedy a failure to comply with a guarantee applicable to the supply of goods. It provides, relevantly:

261   How suppliers may remedy a failure to comply with a guarantee

If, under section 259(2)(a), a consumer requires a supplier of goods to remedy a failure to comply with a guarantee referred to in section 259(1)(b), the supplier may comply with the requirement:

…

(b) if the failure does not relate to tile – by repairing the goods; or

(c) by replacing the goods with goods of an identical type; or

(d) by refunding:

(i) any money paid by the consumer for the goods; and

…

39. Section 262 of the ACL explains the circumstances in which consumers are not entitled to reject goods. It provides, relevantly:

262   When consumers are not entitled to reject goods

(1) A consumer is not entitled, under section 259, to notify a supplier of goods that the consumer rejects the goods if:

(a) the rejection period for the goods has ended; or

…

(2) The rejection period for goods is the period from the time of the supply of goods to the consumer within which it would be reasonable to expect the relevant failure to comply with a guarantee referred to in section 259(1)(b) to become apparent having regard to:

(a) the type of goods; and

(b) the use to which a consumer is likely to put them; and

(c) the length of time for which it is reasonable for them to be used; and

(d) the amount of use to which it is reasonable for them to be put before such a failure becomes apparent.

40. Section 263 of the ACL explains the consequences of a consumer rejecting goods. It provides:

263   Consequences of rejecting goods

(1) This section applies if, under section 259, a consumer notifies a supplier of goods that the consumer rejects the goods.

(2) the consumer must return the goods to the supplier …

…

(4) The supplier must, in accordance with an election made by the consumer:

(a) refund:

(i) any money paid by the consumer for the goods;

…

…

Consideration

41. To determine the outcome of this application the Tribunal must pose and answer the following questions:

1. Did the description of the motor vehicle at the time of supply incorporate electronic front seats with a memory function?

2. If the answer to (a) is “yes” was the failure to supply a motor vehicle with this feature a “significant” departure from the description of the motor vehicle for the purposes of s 260(b) of the ACL?

3. If the answer to (b) is “yes” did the applicant reject the motor vehicle in accordance with s 259(2)(b)(ii) and/or s 259(3)(a) of the ACL?

4. If the answer to (c) is “yes” did the applicant reject the motor vehicle within the rejection period, as that is described in s 262 of the ACL?

5. If the answer to (d) is “yes” what remedy is the applicant entitled to in these proceedings?

Did the description of the motor vehicle at the time of supply incorporate electronic front seats with a memory function?

42. As a matter of construction of the contract, the three page document appended to the contract that sets out the detailed specifications for the motor vehicle must be taken to form part of Part A of the Contract. That is because it describes in detail the standard and optional features of the motor vehicle that is the subject of the Order. That document itemises the U59 Seat Comfort Package as “Standard Equipment”. There can be no doubt that this document relates specifically to the motor vehicle subject to the purchase because the specific “Optional Equipment” and “Upholstery” selected by the applicant for inclusion in the motor vehicle are itemised.

43. The first respondent’s contention that the applicant was obliged to record any representation or undertaking to the effect that the motor vehicle would be supplied with electronic seats with a memory function at the end of Part A of the Order Form therefore cannot be accepted. The U59 Seat Comfort Package is incorporated into the motor vehicle as “standard equipment”. The applicant was entitled to assume it inclusion without making any notation to this effect.

44. The applicant gave evidence that when he researched the Mercedes-Benz A 250 4Matic model before attending the second respondent’s show room on 1 March 2022 he confirmed that the first respondent’s U59 Comfort Seat Package included electronic seats with a memory function. He gave evidence that he asked Mr Chilas on 1 March 2022 to confirm that the motor vehicle he intended to order was fitted with this package. He gave evidence that Mr Chilas did confirm this with him. He was emphatic about this. Ms Felice gives evidence that she was present at the time and heard Mr Chilas give that assurance. The applicant has provided a screen shot of the components of the U59 Seat Comfort Package listed on the first respondent’s website on 6 May 2022 more than 3 months after purchase. The components listed included electronic seats with a memory function at that time.

42. The first respondent contends that a U59 Seat Comfort Package with electronic seats with a memory function is not available in Australia. I do not accept this evidence. The demonstrator vehicle the applicant and Ms Felice test drove on 1 March 2022 did have this feature installed. I do not accept the first respondent’s attempt to prove otherwise. The value descriptions of the characteristics of that vehicle indicate that these features were installed. The first respondent’s case in this regard is tantamount to a claim that Mr and Ms Felice are not telling the truth about the presence of these features in that vehicle. That allegation was not put to Mr Felice when the first respondent had the opportunity to question him, and it is contrary to the objective facts found in the value descriptions for the vehicle which verify what Mr and Ms Felice claim. I note that Mr Chilas’ Statutory Declaration does not contain any reference to the presence or absence of electronic seats with a memory function in the demonstrator vehicle. It is therefore of no assistance to the first respondent on this point.

43. In its responses to NSW Fair Trading and to the applicant’s solicitor’s letter of demand, the first respondent refers to specifications for the Seat Comfort Package that were current at the time of entering into the contract. No such specifications, to the extent that they are different from what is specified in relation to the U59 Seat Comfort Package on the first respondent’s website during the period February to May 2022, have been produced in evidence in these proceedings. As I have said above, the first respondent’s submissions to this effect are bare assertions unsupported by any objective evidence.

44. I note that the 3 page document containing the detailed specifications for the motor vehicle also includes a heading “Local Packages” under which are the words: “[t]here are no packages available for this vehicle”. The first respondent’s case is that the motor vehicle was supplied with an ‘Australian’ seat package. I understand the word ‘local’ to refer the first respondent’s operations in Australia. The absence of any reference to a ‘local’ seat package therefore presents a difficulty for the first respondent’s case.

45. I also note clause 25 of the contract for sale. The effect of that clause is that if the first respondent was unable to supply the motor vehicle with the U59 Seat Comfort Package with electronic seats with a memory function, it was required as a matter of contract, to obtain the applicant’s written consent to this variation to the description of the vehicle. It obviously did not do so.

46. For the foregoing reasons I make the following findings in relation to this issue:

1. At the time of supply the first respondent’s U59 Seat Comfort Package formed part of the description of the motor vehicle to be supplied,

2. At the time of supply the contents of the first respondent’s U59 Seat Comfort Package included “fully electrical front seats with memory functions”,

3. A U59 Seat Comfort Package was installed in the demonstrator vehicle that the applicant and Ms Felice test drove on 1 March 2022,

4. On 1 March 2022 Mr Chilas assured the applicant in Ms Felice’s presence that the motor vehicle to be supplied under the purchase contract would have a U59 Seat Comfort Package which included fully electrical front seats with memory functions equivalent to that which was installed in the demonstrator vehicle they had test driven.

Was the failure to supply a motor vehicle with this feature a “significant” departure from the description of the motor vehicle for the purposes of s 260(b) of the ACL?

50. The words ‘significant’ and ‘departure’ are non-technical English words that should be given their ordinary meaning. Oxford Languages defines ‘significant’ to mean, relevantly: ‘sufficiently great or important to be worthy of attention; noteworthy’. It defines ‘departure’ to mean, relevantly: ‘a deviation from an accepted, prescribed, or usual course of action’.

51. For the reasons set out above, I am satisfied that the supply of the motor vehicle without a U59 Seat Comfort Package that incorporated electronic seats with a memory function was a deviation from the description of the motor vehicle. I am also satisfied that this was at the very least a noteworthy deviation from that description. Whether or not it is appropriate to consider in this analysis the specific needs and preferences of Mr and Ms Felice due to their height differential, a motor vehicle’s front seats are an important feature of any vehicle and electronic seats with memory function add to their utility and comfort. Whether the motor vehicle is or is not supplied with these features is therefore a significant matter.

52. For these reasons I am satisfied that the first respondent contravened s 56 of the ACL when it failed to supply the motor vehicle to the applicant with electronic seats with a memory function in accordance with its description in the contract for sale. This was a major failure by operation of s 260(b) of the ACL.

53. In oral submissions, the first respondent contended that the absence of electronic seats with a memory function was not capable of rendering the motor vehicle of unacceptable quality. That is to confuse the consumer guarantee to be found in s 54 (guarantee as to acceptable quality) with the guarantee contained in s 56. There will be a contravention of s 56 if goods depart in a significant respect from their description whether or not they are otherwise of acceptable quality.

Did the applicant reject the motor vehicle in accordance with s 259(2)(b)(ii) and/or s 259(3)(a) of the ACL?

54. I am satisfied that the applicant contested the supply of the motor vehicle without electronic seats with a memory function on its handover to him by Mr Chilas on 23 April 2022. Mr Chilas may be unable to remember this, but the applicant is emphatic about this in his evidence. His account is supported by contemporaneous objective evidence. In his text message exchange with Mr Chilas on 26 April 2022 he states: “just wanted to ask again about the electric seats as I believe the seat comfort package was included on the price” (emphasis added). Mr Felice can only be referring to his last communication with Mr Chilas, which was at the time of delivery of the motor vehicle to him. Thus clause 17 of the contract is of no assistance to the first respondent. The applicant plainly did advise the second respondent that the motor vehicle had not been supplied in accordance with its contract description within 48 hours of taking delivery of it.

55. The applicant continued to complain about the absence of electronic seats with a memory function from the vehicle over the following two weeks. He received no substantial response to his complaint. This led to his email to Mr O’Connor of 6 May 2022. I am satisfied that in that email the applicant rejects the motor vehicle and states his grounds for doing so. In this respect the words “I would like the car to have what I have paid for, being the electrical front seats with memory function” clearly constitute a rejection of the motor vehicle as it had been supplied to him and the reason for that. That conclusion is reinforced when that email is read as a whole.

Did the applicant reject the motor vehicle within the rejection period, as that is described in s 262 of the ACL?

56. The applicant contested the supply of the motor vehicle to him without electronic seats with a memory function upon delivery of it to him on 23 April 2022. He formally rejected it by email to Mr O’Connor on 6 May 2022 after persistent complaint up to that date in which he requested, then demanded, that the electronic seats with memory function be supplied with the vehicle to no avail. That was only 13 days after the date of supply. Having regard to the s 262(2) considerations I am satisfied that the rejection period had not ended by that time. This case concerns a high value motor vehicle which is supplied with the expectation of many years of use, it is not an immediately consumable good. The major failure about which the applicant complains was immediately apparent at the time of delivery of the motor vehicle to him.

57. In oral submissions, the first respondent appeared to contend that for the purposes of s 262 time must be measured as at the date of the hearing, which was approximately 21 months from the date of supply. That is a misconception. Time runs from the date of rejection. A supplier cannot obtain any benefit from the elapse of time that results from it failing to accept a consumer’s rejection of goods.

What remedy is the applicant entitled to in these proceedings?

58. Having regard to the conclusions I have reached above, the applicant’s rejection of the motor vehicle entitles him, in accordance with s 263 of the ACL, to orders that will require the first respondent to accept its return and refund him the purchase price he paid for it. I will make these orders, subject to the following considerations.

59. This is a case where the applicant’s purchase of the motor vehicle was funded (either in full or part) by a dealer related finance provider, Mercedes-Benz Financial Services Australia Pty Ltd. Consequently, that loan contract must be discharged as an incident of the outcome of the proceedings. Unfortunately, this issue was not identified at the first listing of the application. Consequently, Mercedes-Benz Financial Services Australia Pty Ltd was not joined as a party to the proceedings, and the parties did not attend the hearing prepared to deal with this issue. I have therefore attempted to craft a money order to address this issue. If this is insufficient or ineffective for some reason, any of the parties may apply to the Registrar to have the matter relisted for directions.

60. As at the date of the hearing the applicant has had the use of the motor vehicle for approximately 21 months. Having regard to that he has had the full benefit of the cost of registration and the compulsory third party insurance premium that were incorporated into the contract for sale. Those amounts should therefore be deducted from the amount to be refunded.

61. I understood both parties to suggest that I should also somehow consider the value of the use the applicant has had of the vehicle if making an order for the purchase price to be refunded. There are three difficulties with this. First, there is no evidence before me that would enable me to assess that value. I would, in effect, have to guess at it. Second, the applicant rejected the motor vehicle 13 days after its supply. He had had very little use of the motor vehicle at that time. Any loss in value of the vehicle resulting from his subsequent use of it, and any benefit the applicant has obtained by that subsequent use, results from the first respondent’s conduct in failing to accept the rejection of the motor vehicle when it was rejected. I therefore cannot see, objectively, how any unfairness arises from requiring the first respondent to provide the remedy now that it ought to have provided in May 2022. Third, the applicant’s cause of action and remedy are prescribed by the ACL. It appears to me that I am not free depart from that regime.

Orders

62. For the foregoing reasons, I make the following orders:

1. Shane Felice must return Mercedes-Benz A 250 4Matic (VIN W1K1771472J344958) to Mercedes-Benz Group Australia/Pacific Pty Ltd by delivering it to Tynan Motors Pty Ltd, and do all things necessary to transfer ownership of that motor vehicle to Mercedes-Benz Group Australia/Pacific Pty Ltd, by 31 January 2024.

2. Mercedes-Benz Group Australia/Pacific Pty Ltd must pay Shane Felice $71,432.30 by 31 January 2024 in accordance with the following directions:

1. the amount owing to Mercedes-Benz Financial Services Australia Pty Ltd in relation to the dealer-related finance contract and any fees and charges associated with the early termination of that contract must be discharged first,

2. then any balance remaining to be paid to Shane Felice.

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

Registrar

Decision last updated: 13 August 2024