Irving v D'Michelle t/as Westside Customs and Mechanical

[2015] NSWCATCD 152

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:	Irving v D’Michelle t/as Westside Customs and Mechanical [2015] NSWCATCD 152
Hearing dates:	7 October 2015
Decision date:	10 December 2015
Jurisdiction:	Consumer and Commercial Division
Before:	G.J. Sarginson, General Member
Decision:	1 The respondent is to pay the applicant $7,000.00 on or before 21 days from the date of this decision.
Catchwords:	Consumer claim-Due care and skill-Causation-Damages
Legislation Cited:	Fair Trading Act 1987 ss 28, 79D, 79E, 79L, 79U Australian Consumer Law 2010 s 60
Cases Cited:	Mayne Nickless Ltd v Crawford (1992) 59 SASR 490 Read v Nerey Nominees Pty Ltd [1979] VR 47 Hadley v Baxendale (1854) 156 ER 145 Clark v Macourt (2013) 304 ALR 220 Alexander v Cambridge Credit Pty Ltd (1987) 9 NSWLR 310 at 361 Chand v Commonwealth Bank of Australia [2015] NSWCA 181 Bellgrove v Eldridge (1954) 90 CLR 613 Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272
Category:	Principal judgment
Parties:	Darran Richard Irving (applicant) Patrick Sasha D’Michelle t/as Westside Customs and Mechanical
File Number(s):	MV 15/43487
Publication restriction:	Nil

REASONS FOR DECISION

1. The dispute involves engine reconditioning work that the respondent performed on the diesel motor of applicant’s 1998 Toyota Landcruiser vehicle. The applicant alleges that the work performed by the respondent was not performed with due care and skill, and seeks the cost of rectification of the allegedly defective work.

2. Proceedings were filed with the Tribunal on 15 July 2015. The application seeks an order for damages of $14,000.00. The matter was listed before the Tribunal on 12 August 2015, when the parties were not able to resolve the dispute, despite conciliation. The matter was set down for hearing, with orders that each party file and serve documentary evidence. Each party filed and served documentary evidence in accordance with the directions of the Tribunal.

3. The matter was listed for hearing on 7 October 2015. It proceeded to hearing. Both the applicant and the respondent gave evidence. The applicant’s expert, Mr Organ, appeared at the Tribunal and gave evidence.

APPLICANT’S DOCUMENTS

4. The documents filed and served by the applicant are as follows:

1. A ‘list of expenses’ the applicant states he spent on the motor of the vehicle during the period from 19 December 2013 to 22 June 2015 in the sum of $9,531.53 and other sundry “expenses for consideration”;

2. Business name search on the respondent;

3. Statutory declaration of the applicant dated 25 August 2015;

4. Report of Mr Gregory Organ (Diesel Green (Aust) Pty Ltd) dated 22 June 2015;

5. Statutory declaration of Mr Nick Tsigros dated 24 August 2015;

6. A “draft invoice” of Berrima Diesel Service dated 21 August 2015;

7. A report of Mr John Onrust, G & M Onrust Pty Ltd t/as Turbo Glide, dated 20 August 2015;

8. Tax invoice of Doctor Diesel Pty Ltd dated 11 June 2016 in the sum of $220.00;

9. Tax invoice of Mollier Enterprises Pty Ltd t/as J.C. Diesel dated 22 June 2015 in the sum of $160.00;

10. Quotation of Doctor Diesel Pty Ltd dated 19 August 2015 in the sum of $15,534.59;

11. Quotation of ARA Engine Reconditioning dated 11 August 2015 in the sum of $10,627.50;

12. Quotation of Mollier Enterprises Pty Ltd t/as J.C. Diesel in the sum of $11,419.45;

13. Tax invoice of the respondent dated 26 December 2013. The document states a total price of $4,467.00 for work including “remove and reco (sic) bottom and fit new bearings and rings”;

14. Tax invoice of the respondent dated 14 January 2014 in the sum of $947.00;

15. Tax invoice of the respondent dated 15 May 2014 in the sum of $675.00;

16. Tax invoice of the respondent dated 24 May 2014 in the sum of $1,867.98;

17. Tax invoice of Sydney Diesel Centre Pty Ltd dated 23 January 2014 in the sum of $500.50;

18. Tax invoice of GCG Turbos dated 23 May 2014 in the sum of $1,338.00 in respect of reconditioning the turbocharger of the engine of the applicant’s vehicle;

19. Tax invoice of Berrima Diesel Service dated 28 May 2014 in the sum of $1,365.05 in respect of a service of the fuel injectors of the engine of the applicant’s vehicle;

20. Tax invoice of Hills District Radiator Service Pty Ltd dated 19 December 2013 in the sum of $308.00 in respect of a new radiator for the engine of the applicant’s vehicle;

21. Tax invoice of GCG Turbos dated 9 January 2015 in the sum of $22.50, and associated receipts in respect of oil;

22. Roads and Maritime Services certificate of registration for the vehicle;

23. Photographs of the engine dated 19 December 2013 when it was being reconditioned by the respondent;

24. Photographs of the turbocharger of the engine;

25. A statement by the applicant summarising his claim;

26. A letter from a psychologist.

APPLICANT’S ORAL EVIDENCE

5. The applicant’s evidence was as follows:

6. The applicant is the owner of a 1998 Toyota Landcruiser vehicle. The applicant had owned the vehicle for “3 or 4 years” prior to the repairs conducted by the respondent. The applicant purchased the vehicle for $29,000.00. When the vehicle was taken to the respondent for repairs, it had travelled over 280,000 kilometres. While on a trip to North Queensland in late 2013, the engine of the vehicle overheated, and was using excessive water. The vehicle had an aftermarket (i.e. parts not fitted by the manufacturer of the vehicle) turbocharger and intercooler installed.

7. The applicant took the vehicle to the respondent, who is a licenced mechanic. The vehicle was taken to the respondent on or about 16 December 2013. The respondent advised that the vehicle needed a reconditioned engine. The parties agreed that the respondent would recondition the engine for $4,467.00. The work that the respondent performed is set out in the tax invoice of the respondent dated 26 December 2013. The tax invoice of the respondent dated 26 December 2013 states the vehicle had travelled 280,650 kilometres.

8. The applicant picked up the vehicle on 26 December 2013. The applicant had informed the respondent that he needed the vehicle because he was travelling to Foster NSW for a family holiday. The applicant stated there was a “verbal warranty” of 12 months on the work performed by the respondent. According to the applicant, the respondent stated that there would be no problems in him driving to Foster and back, provided he did not exceed 80 kilometres per hour and returned the vehicle to the respondent for inspection and further service within 3,000 kilometres.

9. The applicant stated that on the trip to Foster the engine was “running rough” and he did not exceed 80 kilometres per hour. He returned the vehicle to the respondent on 14 January 2014. The respondent serviced the engine, and informed the applicant that the steering box of the vehicle was leaking. The work performed by the respondent is set out in the invoice of the respondent dated 14 January 2014. That document also states that the odometer reading of the vehicle as 283,057 kilometres. The applicant stated the respondent told him the motor was “still bedding in”, in response to his complaint that the motor was “running rough”.

10. The applicant stated that on 23 January 2014 he took the vehicle to Sydney Diesel Centre Pty Ltd to “tune” the turbocharger and fuel pump of the vehicle. The invoice of Sydney Diesel Centre dated 23 January 2014 states that the applicant took the vehicle that mechanic to “test run the engine and advise on the general performance of the engine, and check fuel pump timing and also check the boost pressure and exhaust temperature gauges…” The report states that when the vehicle was road tested “the performance was poor and the engine ran a bit rough and the exhaust was very smoky”. The report states that the mechanic tested the boost pressure gauge of the vehicle which showed the gauge was operating correctly, and adjusted the timing of the fuel pump. The report states that after performing such work, the “engine performed better than previously” but “there is still black smoke under heavy acceleration”. The report noted that “an aftermarket turbo and intercooler” had been fitted to the vehicle, and there as “a major oil leak from the power steering”. No comment is made in the report in respect of whether or not the reconditioning of the engine by the respondent has been performed adequately.

11. The applicant stated that the vehicle continued to “run roughly” and was using excessive oil. The applicant stated he telephoned the respondent in early February complaining of excessive oil usage and was told the engine was “still bedding in”. The applicant stated that the vehicle continued to use excessive oil, and he noticed oil leaks from the rocker cover of the engine. The applicant telephoned the respondent in April 2014, and on 15 May 2014, the vehicle was taken to the respondent. The tax invoice of the respondent dated 15 May 2014 states that the respondent repaired the steering box for a cost of $675.00 and removed and replaced the rocker cover gasket of the engine.

12. The applicant stated the vehicle continued to have problems with excessive oil usage. He took the vehicle back to the respondent on 24 May 2014. The respondent stated that there was oil leaking from the turbocharger of the vehicle. The respondent performed an “overhaul” of the turbocharger, including the installation of “new Garrett internals” (Garrett being the manufacturer of the turbocharger). The work performed by the respondent is set out in the tax invoice of the respondent dated 24 May 2014. The applicant paid the respondent $1,867.00 for the work to the turbocharger.

13. The applicant stated that the vehicle continued to use excessive oil, and was overheating. The applicant stated that he telephoned the respondent on a number of occasions in respect of such issues. In November 2014, the vehicle overheated when on a family trip to Jenolan Caves, causing the applicant to stop the vehicle. In early December 2014, the applicant changed the oil of the vehicle to a different (thicker) oil on the advice of the respondent.

14. The applicant stated that the vehicle continued to use excessive oil, and he was regularly topping up the oil. However, in early June 2015 (18 months after the engine recondition was performed by the respondent) the applicant stated the vehicle had lost power. By this stage, the vehicle had travelled approximately 40,000 kilometres since the work performed by the respondent in December 2013. The applicant took the vehicle to Doctor Diesel Pty Ltd. A compression check was performed on the engine of the vehicle. The tax invoice of Doctor Diesel Pty Ltd dated 11 June 2015 states that the engine of the vehicle is “low on compression. Engine needs to be stripped to find the cause of the fault”. The tax invoice of Doctor Diesel Pty Ltd states that the odometer reading of the vehicle was 320,997 (i.e. approximately 40,000 kilometres had been travelled since the engine reconditioning work performed by the respondent).

15. The applicant stated that after he received the report of Doctor Diesel Pty Ltd indicating that the engine was “low on compression” he telephoned the respondent. The respondent told him it was “likely to be a problem with the turbo” that had caused the engine of the vehicle to run “hot”. The applicant, in his written chronology, stated that he “reminded” the respondent that the vehicle had been overheating and using excessive oil “since August 2014” (i.e. 9 months after the engine reconditioning work performed by the respondent). The respondent told the applicant to bring the vehicle in to him, and he would repair the vehicle, but the applicant would have to pay for the repairs. The applicant stated he had “spent enough” on the vehicle, and could not afford further repairs in any event has his wife was about to have a baby.

16. The applicant stated that he contacted Mr Organ on 12 June 2015, and Mr Organ prepared a report dated 22 June 2015.

17. On 22 June 2015, the applicant took the vehicle to Mollier Enterprises Pty Ltd t/as J.C. Diesel. A further compression test was performed on the motor. The tax invoice of Mollier Enterprises Pty Ltd t/as J.C. Diesel states that the No 5 cylinder was found to have “low compression” and the document states “suspect cracked piston or broken ring”. The applicant stated he was orally informed by the mechanic at J.C. Diesel that the motor needed to be pulled down and reconditioned because there were “bottom end issues”.

Statutory Declaration of Mr Nick Tsigros

18. Mr Tsigros states that he is a “qualified mechanic” with over 21 years’ experience. His statutory declaration does not state who he currently works for, or whether he is currently self-employed. Mr Tsigros states that he has known the applicant for “some time” and has “from time to time inspected” the applicant’s vehicle “over the last 3 years”. Mr Tsigros des not state whether he has “inspected” the applicant’s vehicle in a professional capacity, or a friend.

19. Mr Tsigros states that since the respondent reconditioned the motor of the applicant’s vehicle, the applicant has asked him questions “numerous times”. Mr Tsigros states that “one ongoing concern” was excessive oil usage. Notably, Mr Tsigros states that in “August 2014” the applicant spoke to him about the engine temperature of the vehicle being excessive (i.e. approximately 8 months after the engine reconditioning work performed by the respondent). In December 2014, Mr Tsigros assisted the applicant to install “thermos fans” and a new thermostat in the radiator of the applicant’s vehicle.

20. A few weeks before Christmas 2014, the applicant asked Mr Tsigros to look at oil leak from the turbocharger, and Mr Tsigros told the applicant to take the vehicle back to the respondent for repairs. Mr Tsigros states that he was “surprised” the respondent told him to “buy a gasket and replace under the turbo” and “did not investigate” the potential causes of the oil leak from the turbo.

21. In June 2015, Mr Tsigros states that the applicant came to him and was “very concerned” about the compression test performed on the motor of the vehicle. Mr Tsigros states that after looking at the report “it now made sense” that the cause of “a lot of the issues” with the vehicle since Mr Tsigros looked at the vehicle in “May-June 2014” was due to “a major problem with the bottom end of the motor not being correctly reconditioned”. Mr Tsigros states that a reconditioned motor should last for “more than 12-18 months”.

22. Importantly, the statutory declaration of Mr Tsigros does not state precisely what is wrong with the motor (e.g. is the loss of compression due to a cracked piston); nor what constitutes the “bottom end of the motor not being correctly reconditioned”; nor that the cause of the loss of compression is due to the work performed by the respondent. Further, Mr Tsigros does not explain why, as an experienced mechanic, if there may have been an issue with the manner in which the engine was reconditioned causing oil leaks and overheating, that he did not raise the issue with the applicant until the compression test in June 2015.

Report of Mr Gregory Organ

23. The report of Mr Organ adopts the expert witness code of the Tribunal. The substance of the report is brief. Much of the report contains Mr Organ’s qualifications and Mr Organ’s expression of his own perceived skills. Mr Organ is an automotive engineer who has experience in the reconditioning of diesel engines. 4 pages of the report simply set out the various tax invoices the applicant had received, with some items in bold print. There is a “summary” section of the report (which unhelpfully is positioned in the middle of the report) and a half page conclusion at the end of the report.

24. Mr Organ inspected the engine, but did not dismantle the engine. Mr Organ also reviewed the tax invoices of the respondent; photographs of the engine during the reconditioning process; and made assumptions based on what he was told by the applicant (although Mr Organ’s report does not set out the assumed facts). Mr Organ’s report also refers to “a number of tests” he performed, but does not set out such tests.

25. Mr Organ states that the respondent did not follow “Automotive industry standards” during the reconditioning of the engine, because the respondent “has not rectified the worn cylinder bores correctly”. To rectify the worn cylinder heads, the “cylinder block should have been bored out, the crankshaft removed and machined, and the block surface decked”. Mr Organ states that the respondent used a “stone honing brush” which cleaned out the bore of the cylinders, but this does not constitute a “re-bore”. Mr Organ states that the failure to re-bore the cylinder block was contrary to the “correct procedure under the National Guidelines for Engine Reconditioners”, but his report does not contain an extract of the relevant guidelines.

26. Mr Organ sates that the engine of the applicant’s vehicle has “a number of major problems” as a result of “excessive blow-by (worn out rings and worn cylinder bores) and a cooling system that is not correctly working”. Mr Organ states that the “engine is badly worn and requires a full engine recondition”. Mr Organ concludes:

“It is very evident from my evaluation that the engine has not been reconditioned, and that the repairer using a honing tool to clean the bore, ready for new piston rings, is not an accepted industry practice, during my time with SMS Diesel Spares, as the Engineering Manager, I have never seen this type of engine that has travelled over 280,000 kilometres that did not need re-boring and oversized pistons and piston rings used”.

Mr Organ’s Oral Evidence

27. Mr Organ gave oral evidence to the Tribunal, and was questioned by the respondent. Much of the oral evidence given by Mr Organ focussed on his expertise, rather than assisting the Tribunal to understand factual issues, which is the primary role of expert evidence. There was a lengthy debate between Mr Organ and the respondent over whether or not what the respondent did to the motor complied with the ‘national guidelines’ for diesel engine reconditioning.

28. However, the following salient evidence was given by Mr Organ: (a) the failure to re-bore the cylinder heads and install oversized pistons and rings was the cause of the loss of compression in a cylinder in the motor, rather than the engine “running hot” and using excessive oil due to an aftermarket turbocharger and intercooler being installed, or the failure to have the fuel injection system serviced until May 2014, as the respondent asserted; (b) the failure to re-bore the cylinders and install oversized pistons and piston rings was responsible for the excessive oil usage and higher temperatures; (c) the engine would have “inevitably” failed by reason of the inadequate re-boring of the cylinders and failure to install oversize pistons and piston rings; and (d) the cost of a reconditioned diesel motor (including installation) was, in Mr Organ’s experience, $7,000.00 to $8,000.00.

RESPONDENT’S DOCUMENTS

29. The documents filed and served by the respondent are as follows:

1. An unsigned and undated statement of the respondent setting out his version of events;

2. A photograph of pistons of the engine of the applicant’s vehicle dated 19 December 2013;

3. Techfax “technical specifications” in respect of reconditioning of a Toyota engine, and document from Tecfax setting out causes of piston crown damage;

4. Tax invoices of the respondent to the applicant dated 26 December 2013 and 14 January 2014;

5. Tax invoice of Sydney Diesel Centre Pty Ltd dated 23 January 2014;

6. Tax invoice of GCG Turbos dated 23 May 2014;

7. Tax invoice of Berrima Diesel Service dated 28 May 2014;

8. Downloads from internet websites in respect of causes of “black smoke” from engines, and piston damage;

9. Tax invoice of Mollier Enterprises Pty Ltd t/as J.C. Diesel dated 22 June 2015;

10. 2 advertisements from EBay in respect of the cost of a “fully reconditioned” Toyota Landcruiser 4.2 1HZ diesel engine. The price of 2 motors advertised was $3,650.00 and $3,850.00 respectively.

RESPONDENT’S ORAL EVIDENCE

30. The respondent’s oral evidence can be summarised as follows:

31. When the respondent brought his vehicle to the respondent in December 2013, he was complaining of overheating and excessive water usage of the vehicle, particularly on a trip to North Queensland;

32. The applicant said he was on a “strict budget” and could only afford $3,500.00 to $4,000.00, having previously been quoted “up to $8,000.00” for an engine recondition. The applicant wanted the work to be performed quickly and prior to Christmas 2013, as the applicant was planning to travel to Foster NSW;

33. The respondent removed the head of the engine block and found all pistons overheated and cracked. The respondent took photographs and sent them to the applicant’s telephone;

34. The applicant came to the respondent’s premises. The respondent explained that the engine block was “within specs” as set out in the SMS Diesel Spares Techfax technical specification sheet for engine reconditioning, and the respondent could recondition the engine and stay within budget as the engine did not require a re-bore and oversized pistons. The respondent told the applicant that the overheating problem was caused by the aftermarket turbocharger and intercooler, and “strongly recommended” the parts be removed and “standard parts” be installed. The respondent also stated he informed the applicant that the fuel injectors and fuel pump had not been properly adjusted when the aftermarket turbocharger and intercooler had been installed, and required adjustment;

35. The respondent stated the applicant did not want to replace the turbocharger and intercooler, nor have the fuel system adjusted as he was on a limited budget, and wanted the car back as soon as possible so that he could take his family on the trip to Foster, NSW. The respondent completed the work as set out in the tax invoice of the respondent dated 26 December 2013;

36. When the applicant returned the vehicle on 14 January 2014, the respondent noted the engine was blowing black smoke, and that the cause of this was “fuel issues with his injectors and pump”. The respondent states he told the applicant to get this problem fixed immediately, as it would damage the motor of the vehicle. The respondent states the applicant told him he would get the fuel system fixed “straight away”;

37. On 15 May 2014, the applicant returned the vehicle for the respondent to repair leaking power steering. The respondent states that this was the reason the vehicle was brought to him for repairs, and after the repairs were completed and paid for, the applicant stated he had not had the fuel system of the vehicle repaired. The respondent stated he told the applicant this was the reason the vehicle was using excessive oil, and again told the applicant to have the fuel system repaired or the engine would continue to use oil and have problems;

38. On 23 May 2014, the respondent repaired the turbocharger of the vehicle. The respondent stated the reason that there was excessive oil in the turbocharger was due to the fuel system of the vehicle not being adjusted (the fuel pump and fuel injectors). The applicant stated that it was only on 28 May 2015, 6 months after the engine was reconditioned that the applicant had the fuel injectors and fuel pump adjusted by Berrima Diesel, and this “negligence” had caused the excessive oil usage and damage to the motor;

39. The respondent stated that in August 2014 the applicant telephoned him complaining that the engine was overheating. This was the first complaint of overheating, according to the respondent. The respondent requested the applicant bring the vehicle to him to be inspected, but the applicant did not bring the vehicle for inspection until November 2014;

40. The respondent stated that in early November 2014, the applicant brought the vehicle to him complaining of “excessive heat on panels”. The respondent stated he informed the applicant the cause of the overheating was the aftermarket turbocharger and intercooler, and that it would cost approximately $1,200.00 to replace the parts with original parts. The respondent stated the applicant did not want to expend further monies, and left;

41. According to the respondent, the next occasion he dealt with the applicant was in June 2014, when the applicant telephoned him stating the engine had developed a “rough idle”. The respondent asked questions, including how much boost (i.e. pressure) the turbocharger was imparting on the engine. The respondent said he asked the applicant to bring the vehicle to his workshop for inspection. The respondent stated the applicant was upset the respondent could not tell him over the telephone what the problem was, and did not bring the vehicle in for inspection. The applicant subsequently sent a text message that the engine was running 11 pounds boost. The respondent stated that the maximum boost for the engine of the applicant’s vehicle was 9 pounds.

42. The respondent stated that he was contacted by a NSW Fair Trading vehicle inspector, Mr Galea, in July 2014, with the applicant claiming $14,000.00 for the cost of a new motor. Proceedings were subsequently filed in the Tribunal.

43. The respondent submitted that he had performed the engine reconditioning in December 2013 in accordance with industry practice, and it was acceptable not to have re-bored the cylinder block and installed oversize cylinders in the engine. The respondent submitted the applicant wanted the work performed on a strict budget. The respondent argued that the cause of the loss of compression of the engine was not the reconditioning work performed in December 2013, but (i) the aftermarket turbocharger and intercooler causing the engine to use excessive oil and operate at excessive temperatures; and (ii) the failure of the applicant to have the fuel pump and fuel injectors repaired until May 2014, causing the engine to use excessive oil.

APPLICANT’S EVIDENCE IN REPLY

44. The applicant denied that he had told the respondent he was on a “strict budget” in December 2013, and that he had no financial issues, but wanted the engine reconditioned to fix the previous overheating problem.

JURISDICTION

45. The applicant is a “consumer” with the meaning of Section 79D of the Fair Trading Act 1987, and the claim is a “consumer claim” within Section 79E of the Fair Trading Act 1987. The proceedings have been commenced within the 3 year limitation period from the date of the cause of action pursuant to Section 79L of the Fair Trading Act 1987. The Tribunal has jurisdiction in the matter.

LEGAL PRINCIPLES

46. The Australian Consumer Law 2010 (‘the ACL’) is part of the law of NSW, pursuant to Section 28 of the Fair Trading Act 1987. Section 60 of the ACL states as follows:

“If a person supplies, in trade or commerce, services to a consumer, there is guarantee that services will be rendered with due care and skill”.

47. Pursuant to Section 3(1) (a) (i) of the ACL, the applicant is a “consumer” within the meaning of the ACL.

48. The consumer guarantee that services be provided with “due care and skill” that is implied into consumer contracts is a guarantee that the services will be performed in a “careful, skilful, and workmanlike” manner. However, the test is an objective test (Mayne Nickless Ltd v Crawford (1992) 59 SASR 490; Read v Nerey Nominees Pty Ltd [1979] VR 47 at 49; S.G. Corones The Australian Consumer Law (2011) Lawbook Co pp 361-362), and all of the facts and circumstances must be considered in the context of the application of an objective standard of due care and skill.

49. If there is breach of a consumer guarantee provision of the ACL, the appropriate measure of damages is in contract, rather than negligence. Accordingly, damage must not be too remote from the breach (applying the principle of Hadley v Baxendale (1854) 156 ER 145) and if breach is demonstrated and the loss is not too remote, the guiding principle for assessment of damages is an amount of money that would put the party in the position it would have been had the breach not occurred (Clark v Macourt (2013) 304 ALR 220). Further, there must be a causal nexus between the breach and the loss suffered. Causation is to be determined by looking at all the facts and circumstances to determine whether the breach was a cause of the loss, unless there is an intervening act or event that in a practical sense is the sole cause of the damage (Alexander v Cambridge Credit Pty Ltd (1987) 9 NSWLR 310 at 361; Chand v Commonwealth Bank of Australia [2015] NSWCA 181).

50. Pursuant to Section 79U (1) of the Fair Trading Act 1987, if the Tribunal awards damages, it must be satisfied that its orders are “fair and equitable to all parties to the claim”.

APPLICATION OF FACTS TO LEGAL PRINCIPLES

51. There is no dispute that the respondent performed mechanical work on the applicant’s vehicle in December 2013 which involved a “reconditioning” of the engine. The tax invoice of the respondent uses the phrase “remove and reco bottom of engine and fit new bearings and rings”. The respondent does not dispute that he did not re-bore the cylinders of the engine block of the vehicle, and install oversize pistons and piston rings, but cleaned the bore of the cylinders using a tool, and installed pistons and rings of the same size. There is also no dispute that in June 2015 the engine has a loss of compression in one cylinder, although the precise nature of the damage and the cause of the damage are in dispute. There is also no dispute that the it was 18 months after the work performed by the respondent that a compression test revealed a loss of compression of a cylinder in the engine, and the vehicle had travelled approximately 40,000kilometres since the engine reconditioning performed by the respondent.

52. The salient issues are:

1. Is a cause of the current loss of compression of one cylinder of the engine due to the failure of the respondent to perform a complete re-bore of the cylinder block and install oversize pistons and rings, or is it due to the aftermarket turbocharger and intercooler of the vehicle causing the vehicle to run over temperature (as the respondent asserts) or any other cause (such as the manner in which the applicant maintained, or failed to maintain, the engine, or the manner in which it was driven;

2. If the failure to perform a complete re-bore of the cylinder and install oversize piston rings is a cause of the loss of compression of the engine, did the failure to perform such work, or inform the applicant of the risks of such work not being performed, constitute a failure to perform services with due care and skill in breach of Section 60 of the ACL.

53. The Tribunal accepts the evidence of the respondent that, when he performed the engine reconditioning work in December 2013, the applicant wanted the work performed before Christmas, and that the applicant wanted the work performed on a strict budget. The applicant denied that he was under any financial hardship at the time, but considering the proximity to Christmas the respondent’s version of events is more likely. Further, the applicant presented as a person who had a good knowledge of his vehicle and mechanical issues, and the statutory declaration of Mr Tsigros states that he had been involved with the vehicle for a number of years. The Tribunal also accepts the evidence of the respondent that he informed the respondent that the turbocharger and intercooler could cause issues regarding the engine of the vehicle running over temperature, but that the applicant did not want the turbocharger and intercooler replaced, considering the applicant had either caused for the installation of the aftermarket turbocharger and intercooler himself, or was aware they had been installed and wanted to retain them to improve performance characteristics of the motor or did not want to spend further monies.

54. However, the Tribunal accepts the evidence of the applicant that the respondent did not make clear the risks of a ‘cheaper’ engine reconditioning (i.e. not re-boring the cylinders and installing oversize pistons and rings, but cleaning the cylinder block bores with a tool and installing cylinders and rings of the same size). There is no contemporary evidence, such as a statement on the tax invoice of the respondent, as to how long the reconditioned engine was likely to last, nor that cleaning the cylinder bores with a tool and re-installing pistons and rings of the same size may affect the life of the reconditioned engine.

55. The Tribunal does not accept that the applicant only drove the vehicle to Forster, NSW, and back to south western Sydney (where the applicant resides) in the Christmas/New Year period of 2013-2014. The Tribunal takes judicial notice that the distance between south western Sydney and Forster is 310 kilometres, and the vehicle had travelled approximately 3,000kilometres when it was taken back to the respondent for a service on 14 January 2014. Either the applicant went on a significantly longer trip, or used the vehicle much more extensively than he indicated in evidence. However, the respondent did not challenge the applicant’s evidence that the respondent told the applicant to return the vehicle for a service within 3,000 kilometres, and there is no evidence (such as an expert report an independent mechanic arranged by the respondent) that the manner in which the applicant used the vehicle during the ‘running in’ period damaged the motor of the vehicle. Further, the respondent did not put to Mr Organ in questioning that the manner in which the applicant drove the vehicle while it was being “run in” damaged the engine of the vehicle.

56. There are also discrepancies in the evidence of the applicant regarding when engine of the vehicle started to “run hot” after the engine reconditioning work performed by the respondent in December 2013. The applicant’s oral evidence indicated that this had been a constant problem since the work was performed. However, the written chronology prepared by the applicant, and the statutory declaration of Mr Tsigros indicates the issue with overheating occurred from August or November 2014 (and after the respondent performed work on the turbocharger of the vehicle in May 2014). In respect of oil leaks, the contemporaneous documentary evidence and oral evidence of the applicant is consistent in respect of the engine (including the turbocharger) leaking oil regularly from after work was completed by the respondent in December 2013.

57. There are flaws in the evidence of Mr Organ. As discussed above, Mr Organ does not set out precisely in his report what is currently wrong with the engine, and he could have more clearly set out the causal relationship between the work performed by the respondent, and the current loss of compression of one cylinder of the motor. Further, his report does not set out how long a “reconditioned” motor should be expected to last for (including the time period and kilometres). The statutory declaration of Mr Tsigros states that the motor should have lasted for “longer” than 18 months, but little weight is given to Mr Tsigros’ opinion because (a) his statutory declaration does not state that he has read and agrees to comply with the Tribunal’s Expert Witness Code of Conduct; (b) despite having advised the applicant and performed work on the applicant’s vehicle over a number of years, it was not until June 2015 that Mr Tsigros believed there may be a causal link between the engine reconditioning work performed by the respondent, and the problems the applicant had with the engine over an 18 month period.

58. However, the respondent has not filed and served any evidence from an independent expert witness to contradict the opinion of Mr Organ that an adequate “reconditioning” of the engine required a re-bore of the cylinders and the installation of oversize pistons and piston rings, and that there is a causal nexus between the failure to perform such work by the respondent, and the loss of compression of the motor in June 2015. Mr Organ explicitly rejected the respondent’s assertion that the cause of the loss of compression was due to the installation of an aftermarket turbocharger and intercooler, or the failure of the applicant to have the fuel injection system and fuel pump adjusted until May 2014, and there is no evidence by an independent expert to contradict Mr Organ’s opinion on this issue.

59. The Tribunal is satisfied on the evidence that:

1. Even accepting that the work performed by the respondent was ‘on a budget’, the respondent when reconditioning the engine should have re-bored the cylinders of the engine and installed oversized pistons and rings when performing the engine recondition in December 2013. The respondent failed to do this, and failed to inform the applicant that by not performing such work, the lifespan of the engine could be significantly compromised;

2. There is a causal nexus between the failure of the respondent to re-bore the cylinders of the engine and install oversize pistons and rings and the loss of compression of one cylinder of the engine in June 2015;

3. There is not sufficient evidence to conclude that the turbocharger or intercooler, or the failure by the applicant to have the fuel injection system and fuel pump adjusted until May 2014, is a substantial cause of the loss of compression of one cylinder of the engine;

4. The engine needs to be further repaired and reconditioned;

5. The respondent failed to perform services with due care and skill when performing the reconditioning of the engine of the applicant’s vehicle in December 2013.

QUANTUM

60. As discussed above, the guiding principle of assessing damages in respect of breach of contract is to put the party in the position it should have been if the contract had not been breached, not in a better or worse position. Having accepted that the engine requires being further reconditioned (or replacement with a reconditioned engine) the applicant is entitled to the cost of rectification of the engine, provided the work involved and cost is not unnecessary or unreasonable (Bellgrove v Eldridge (1954) 90 CLR 613; Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272) and subject to the principle that orders must be fair and equitable to all parties to the claim.

61. The Tribunal does not accept that it is appropriate, nor fair and equitable, to award the cost of a fully reconditioned motor as set out in the quotes of Doctor Diesel Pty Ltd dated 19 August 2015 in the sum of $15,534.59; ARA Engine Reconditioning dated 11 August 2015 in the sum of $10,627.50; or Mollier Enterprises Pty Ltd t/as J.C. Diesel in the sum of $11,419.45. The applicant’s vehicle is 17 years old, and has travelled over 320,000 kilometres. The quotation and tax invoice of the respondent to recondition the engine was $4,476.00. The vehicle has travelled over 40,000 kilometres since the work performed by the respondent in December 2013. The respondent has provided advertisements on for “fully reconditioned” engines for less than $4,000.00 (although such advertisements do not take into account the cost of installation of such a motor).

62. In light of the expert evidence of Mr Organ that, in his experience, the cost of a reconditioned engine (including labour) for the applicant’s vehicle is in the range of $7,000.00 to $9,000.00, the Tribunal is satisfied that it is appropriate to award the applicant damages of $7,000.00 for the cost of a further reconditioning of the engine of the applicant’s vehicle, to rectify the faults caused by the work performed by the respondent in December 2013. The Tribunal is not satisfied that any further amounts should be awarded in respect of other expenses referred to in the applicant’s materials as (a) the application filed with the Tribunal only seeks orders in respect of the cost of having the engine further reconditioned; (b) there is no evidence the work performed by the respondent on 14 January 2014, 15 May 2014, or 24 May 2014 was not performed with due care and skill. Further, the expenses set out by the applicant in respect of the cost of a replacement vehicle, taxi expenses, and the cost of fitting a baby seat to the replacement vehicle are too remote from the breach.

CONCLUSION

63. For the above reasons, the Tribunal orders the respondent pay the applicant $7,000.00 in respect of the respondent’s breach of Section 60 of the ACL, with such payment to be made within 21 days of the date of this decision.

G.J. Sarginson

General Member

Civil and Administrative Tribunal of New South Wales

10 December 2015

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: 28 January 2016