Jackson v Honda Australia Pty Ltd

[2022] NSWCATCD 37

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Jackson v Honda Australia Pty Ltd [2022] NSWCATCD 37

Hearing dates:

7 February 2022

Date of orders:

24 March 2022

Decision date:

24 March 2022

Jurisdiction:

Consumer and Commercial Division

Before:

K George, General Member

Decision:

The respondent is to pay to the applicants the sum of $8,098.45 within 14 days of the date of this decision.

Catchwords:

CONSUMER LAW — Consumer guarantees — Action against manufacturer

Legislation Cited:

Australian Consumer Law

Fair Trading Act 1987 (NSW)

Cases Cited:

Nil

Texts Cited:

Nil

Category:

Principal judgment

Parties:

Mark and Nicole Jackson (Applicant)

Honda Australia Pty Ltd (Respondent)

Representation:

Applicant (Self-represented)

Consumer Resolution Advocate (Respondent)

File Number(s):

MV 21/46246

Publication restriction:

Nil

REASONS FOR DECISION

Background

1. The applicants purchased a new motor vehicle, a Honda HRV, from Tynan Motors Honda on 31 July 2015. Because Tynan Motors Honda is no longer a Honda dealer, the applicants decided to bring this claim against the manufacturer.

2. By application to the Tribunal dated 10 November 2021, the applicants claim the amount of $12,500.00, being the estimated costs of repair to the vehicle.

3. They claim that there is ‘excessive corrosion onset in [the] majority of the vehicle’ and that the respondent has failed to comply with the consumer guarantee of acceptable quality under section 54 of the Australian Consumer Law (‘ACL’) because the vehicle:

1. is not fit for purpose; and

2. is not free from defects.

4. The respondent agrees that the vehicle is damaged by corrosion, but argues that the vehicle is of acceptable quality because the rust spots are minor and repairable, and the corrosion was caused by a combination of the corrosive coastal environment in which the vehicle was located and insufficient maintenance of the vehicle by the applicants.

5. The warranty for body/paint corrosion expired on 5 August 2021.

6. Nevertheless, the respondent has offered to repair the vehicle at its own expense.

7. However, this is rejected by the applicants because they say it would require extensive dismantling of the vehicle, thus, they submit, compromising its integrity, safety and value.

8. The applicants wish to undertake the repairs themselves and apply extra rust protection which the respondent has declined.

Appearances

9. The applicants appeared in person and relied on a bundle of documents provided to the Tribunal and to the respondent. Mr Jackson gave sworn oral evidence.

10. The respondent also relied on documents provided to the Tribunal and to the applicants and was represented by Ms Mikaila Cass, Consumer Resolution Advocate for Honda Australia Pty Ltd.

Jurisdiction

11. For the following reasons the Tribunal is satisfied it has jurisdiction to hear and determine this application, pursuant to Part 6A of the Fair Trading Act 1987 (NSW) (‘the Act’).

12. The application falls within the definition of “consumer claim” under Section 79E of the Act. Section 79E(2) states that a consumer claim includes a reference to a claim by a consumer against a supplier (for example, a manufacturer or wholesaler) who is not the direct supplier of goods or services to the consumer if the claim arises from or in connection with the supply of those goods or services by the direct supplier to the consumer. In this claim the respondent is the manufacturer and / or Australian importer of the goods.

13. Section 79H operates to create a presumption that anyone who claims to be a consumer is a consumer, unless the person wishing to prove the contrary is able to establish the contrary. The respondent accepts that the applicant is a consumer.

14. The vehicle was provided in NSW as prescribed in section 79K(1) of the Act.

15. The proceedings have been brought within the 3 year limitation period prescribed under section 79L. The claim is within the monetary limit of consumer claims to the Tribunal. Under section 79N the applicant sought an order that requires a respondent to pay to the claimant a specified amount of money.

Relevant Law

Consumer Guarantees

16. Section 28 of the Act stipulates that the ACL applies to the Tribunal’s jurisdiction.

17. The ACL contains the following consumer guarantees in respect of goods that are relevant to this claim.

18. Section 54 of the ACL states that goods must be of acceptable quality.

19. Section 54(2) states goods are of acceptable quality when they are (a) fit for all the purposes for which goods of that kind are commonly supplied; and (b) acceptable in appearance and finish; and (c) free from defects; and (d) safe; and (e) durable; as a reasonable consumer fully acquainted with the state and condition of the goods (including any hidden defects of the goods), would regard as acceptable.

20. Further, goods are not of unacceptable quality if the consumer is at fault. At section 54(6) goods do not fail to be of acceptable quality if the consumer causes them to become of unacceptable quality, or fails to take reasonable steps to prevent them from becoming of unacceptable quality and they are damaged by abnormal use.

Damages against Manufacturers of Goods

21. Section 271 of the ACL states relevantly:

(1) If:

(a) the guarantee under section 54 applies to a supply of goods to a consumer; and

(b) the guarantee is not complied with;

an affected person in relation to the goods may, by action against the manufacturer of the goods, recover damages from the manufacturer.

(2) Subsection (1) does not apply if the guarantee under section 54 is not complied with only because of:

(a) an act, default or omission of, or any representation made by, any person other than the manufacturer or an employee or agent of the manufacturer; or

(b) a cause independent of human control that occurred after the goods left the control of the manufacturer; …

22. Section 272 restricts the damages which may be recovered against manufacturers of goods:

(1) In an action for damages under this Division, an affected person in relation to goods is entitled to recover damages for:

(a) any reduction in the value of the goods, resulting from the failure to comply with the guarantee to which the action relates, below whichever of the following prices is lower:

(i) the price paid or payable by the consumer for the goods;

(ii) the average retail price of the goods at the time of supply; and

(b) any loss or damage suffered by the affected person because of the failure to comply with the guarantee to which the action relates if it was reasonably foreseeable that the affected person would suffer such loss or damage as a result of such a failure.

23. Section 273 imposes a time limit for actions against manufacturers of goods:

An affected person may commence an action for damages under this Division at any time within 3 years after the day on which the affected person first became aware, or ought reasonably to have become aware, that the guarantee to which the action relates has not been complied with.

Onus of Proof

24. The applicants bear the onus of proving their claim pursuant to the above provisions on the civil standard of proof, that is, on the balance of probabilities.

Issues for Determination

25. The issues for determination are therefore:

1. As an affected person, did the applicant bring their claim within the time limit?

2. If so, is the vehicle of acceptable quality? Specifically:

1. is it free from defects?

2. is it fit for purpose?

3. Did the applicants cause the vehicle to become of unacceptable quality, or fail to take reasonable steps to prevent it from becoming of unacceptable quality and was the vehicle damaged by abnormal use?

4. Was the guarantee not complied with only because of:

1. an act, default or omission of, or any representation made by, any person other than the manufacturer or an employee or agent of the manufacturer; or

2. a cause independent of human control that occurred after the goods left the control of the manufacturer?

5. If the vehicle is not of acceptable quality, what is the appropriate remedy?

Findings and Determination

As an Affected Person, Did the Applicants Bring their Claim Within the Time Limit?

26. I am satisfied that the applicants as the consumer who acquired the vehicle are an “affected person” as defined in section 2(1) of the ACL.

27. I accept their uncontested evidence that they first became aware of the rust and corrosion towards the end of March 2021 and brought this to the attention of Collins Honda, a local dealership, on 15 June 2021.

28. Therefore this claim is brought within the prescribed time limit.

Is the Vehicle Free from Defects?

29. For the following reasons I am not satisfied that the applicants have proved that the vehicle is not free from defects.

30. The applicants relied on a report by Brian Cowan, Licenced Panel Beater, dated 18 November 2021. He inspected the vehicle and measured paint thickness in various locations, concluding:

‘I have found that the overall level of refinish and paint coverage to this vehicle is below average and not satisfactory.’

31. The Tribunal does not put weight on this opinion because:

1. The opinion appears to be based on a comparison between the paint coverage of the applicants’ vehicle and a table which appears in Part B of the report, entitled ‘Average Paint Thickness of Cars’, providing a range for European cars, USA cars and Japanese cars.

2. The report refers to this table as an ‘Industry Recommended measurement guide’. It is not. Rather it is a table that appears on a website referenced by the report, cardetailingplanet.com

3. The website provides no authority for the data in the table.

4. Moreover, the website relies on the paint thickness table as a reference when polishing or compounding cars, not in relation to corrosion.

5. Arguably the website Mr Cowan relies on actually contradicts his own conclusion that the paint thickness on the applicants’ vehicle is not satisfactory. The website states that:

‘There’s no definitive answer to how thick paint should be on any vehicle. Each vehicle is different. Even from the same manufacturers.’

6. Mr Cowan’s report does not state the relevance of average paint thickness. For example, is average paint thickness the same as a mandated, minimal standard of coverage, or indicative of best practice in manufacture?

7. The report does not explain the causal connection, if any, between paint thickness and corrosion.

32. The applicants also relied on their own inspection of similar vehicles in various shopping centre car parks. They provided photographs of what they say is surface and advanced corrosion in five vehicles.

33. The applicants submit that their inspection confirms that ‘Honda HRV has a manufacturing build quality defect based on paint thickness’ and are not ‘fit for purpose to suit the conditions faced in Coastal Australia.’

34. I do not accept the validity of this conclusion. Leaving aside questions about the independence and objectivity of such an inspection conducted as it was by the applicants themselves, it is not possible to determine the cause of corrosion in those vehicles, such as the environment in which they are driven or stored and whether they are maintained appropriately.

35. Moreover, corrosion present in a sample of five vehicles, whatever the cause, does not equate to a manufacturing defect across an entire model of vehicle.

36. Therefore I do not accept that there is evidence of a defect in the vehicle’s paint finish or thickness which has caused it not to be of acceptable quality and caused or contributed to the corrosion.

Is the Vehicle Fit for Purpose?

37. For the last 4 years the applicants have resided in coastal Cronulla with the vehicle.

38. They gave evidence that the vehicle is garaged underground at their home, and during work hours travels to Darling Harbour where it is parked underground, and is sometimes parked at ‘Woodware Station’. Since there is no such railway station, the Tribunal assumes this is a typo and actually refers to Woolooware Station, also on the coast near Cronulla.

39. Notwithstanding that the vehicle is often garaged, I find that the vehicle spends significant amounts of time exposed to the coastal area around Cronulla and wider Sydney.

40. The applicants rely on the respondent’s evidence that the vehicle is ‘not designed to withstand corrosive environments for a sustained period.’

41. They submit that the vehicle is therefore not fit for purpose because it is not manufactured to withstand Australian coastal conditions which are exposed to corrosive sea spray.

42. The respondent referred to page 414 of the Honda Owner’s Manual which says:

‘Wash the vehicle frequently. Further, make sure to wash the vehicle in the following circumstances: if driving on roads with road salt; if driving in coastal areas.’

43. The respondent’s submission is, in effect, that the vehicle is fit for purpose when driving in coastal areas if it is washed in accordance the manufacturer’s instructions.

44. When questioned by the Tribunal whether he washes the vehicle, Mr Jackson replied:

‘It is washed weekly … minimum once a month. It is also polished and detailed once or twice a year.’

45. The Owner’s Manual does not define ‘frequently’.

46. In the absence of a definition from the respondent, I rely on the definitions provided by various dictionaries including ‘often’, ‘regularly’, ‘at short intervals’.

47. The opposite of frequently is defined as ‘seldom’ or rarely’.

48. I find that washing the vehicle ‘weekly’ is frequent washing, or in other words, ‘regular’ or ‘often’, as is washing the vehicle ‘minimum once a month’, albeit less frequently. Certainly, it could not be said on the applicant’s evidence that they wash their vehicle rarely or seldomly.

49. Therefore I find that the applicants complied with the washing instructions in the Owner’s Manual.

50. Despite the applicants following these instructions the vehicle is damaged by corrosion.

51. Although the respondent minimises the extent of the rust, describing it as ‘minor’ and ‘small’ and ‘not a structural concern’, the respondent agrees that the vehicle should be repaired because ‘unrepaired rust spots may deteriorate…’ (see letter from B King, 21 January 2021).

52. According to the respondent’s own evidence, this will require, inter alia, the removal and refitting of the engine.

53. I find that:

1. The vehicle is not fit for all the purposes for which a vehicle is commonly supplied, in this case, driving in coastal areas; and

2. A reasonable consumer fully acquainted with the state and condition of the vehicle would not regard the vehicle as acceptable quality after 6 years of use, given the corrosion and necessity of repairs, including the removal and refitting of the engine.

Did the Applicant Cause the Vehicle to Become of Unacceptable Quality, or Fail to Take Reasonable Steps to Prevent it From Becoming of Unacceptable Quality and Was the Vehicle Damaged by Abnormal Use?

54. The respondent relies on the report by Mr Hooker of Metallurgical Testing & Consulting Engineers (‘MTCE’). He tested corrosion deposits from the vehicle and found they were high in chlorine ion content and moderately acidic.

55. Mr Hooker states that a common source of this contamination in motor vehicles is

‘sea water and sea spray …Vehicles exposed to seacoast environments … require diligence by the owner to ensure that all external surfaces are rinsed with clean water to remove accumulated salt deposits …’ (my emphasis).

56. The respondent also relies on an assessment by Fabian Gaida of PPG Industries Australia Pty Ltd. Mr Gaida’s qualifications or experience is not disclosed. He says:

‘Usually vehicle owner [sic] wash their vehicles, but they do not wash / pressure wash the underneath area of their vehicles. It is lack of maintenance. If the owner of the vehicle would have frequently washed the underneath areas and removed contaminates, this would have not occurred. There are car washes that do offer that type of wash; it is mainly a pressure wash.’

57. The only relevant instruction provided to the applicants when they purchased the vehicle was to wash it ‘frequently’. The applicants did so.

58. Therefore the Tribunal finds:

1. The reasonable consumer would not have been aware of the need to wash ‘all external surfaces’, including the underneath of the vehicle, or pressure wash the underneath of the vehicle. The applicants were never on notice that they should do so.

2. The applicants did not cause the vehicle to become of unacceptable quality, or fail to take reasonable steps to prevent it from becoming of unacceptable quality.

3. The applicants took all reasonable steps to maintain the vehicle in accordance with the respondent’s instructions.

4. There is no evidence of the abnormal use of the vehicle.

5. The cause of the corrosion to the vehicle was a combination of the vehicle’s exposure to salt spray in a coastal environment and the respondent’s failure to provide the applicant with adequate instructions for its maintenance, specifically the necessity to frequently pressure wash all external surfaces of the vehicle, including its underneath to remove salt contaminants.

6. The respondent has failed to comply with the guarantee of acceptable quality in section 54 of the ACL.

Was the Guarantee Not Complied with Only Because of:

(a) an Act, Default or Omission of, or Any Representation Made By, Any Person Other Than the Manufacturer or an Employee or Agent of the Manufacturer; or

(b) a Cause Independent of Human Control that Occurred After the Goods Left the Control of the Manufacturer?

59. The words “only because of” are critical: the other person’s failure must be the sole cause of the failure to comply with the guarantee.

60. The respondent referred to section 271(2)(a) of the ACL and argued that the applicants caused the vehicle not to become of acceptable quality, referring to the MTCE report.

61. Based on the same findings outlined above, I reject this submission.

62. Although environmental factors were a cause of the damage to the vehicle, this was not independent of human control. The environmental impact on the damage would have been minimised or avoided entirely if the manufacturer had provided adequate maintenance instructions to the applicant.

What is the Appropriate Remedy?

63. The respondent submitted that it had agreed to repair the vehicle at its own cost and that there is no evidence that the proposed repair method would undermine the integrity, safety or value of the vehicle.

64. Even if that is so, the Tribunal does not have the power to make an order for repair against a manufacturer. The only remedies available are set out in section 272 of the ACL.

65. Given the respondent’s own evidence of the risk of salt contamination and consequential damage to vehicles driven frequently in coastal areas, I find that it was reasonably foreseeable that, if the respondent failed to provide adequate maintenance instructions to the applicant who purchased the vehicle in the coastal region of Sydney, the applicants would suffer loss or damage in the form of corrosion to the vehicle.

66. The applicants are therefore entitled to recover damages for this loss.

67. The loss is quantified on the basis of the cost of repairing the damage to the vehicle.

68. Both parties relied on repair quotations from Collins Honda and Total Car Body Repairs Pty Ltd.

69. An email from Mr Kellett of Collins Honda dated 19 January 2022 provides an updated estimate of 20 to 30 hours of labour to complete the repairs.

70. Therefore I find that the loss of the applicants is quantified as follows:

1. $2,988.70 (incl GST) - itemised repairs by Total Car Body Repairs Pty Ltd

2. $4,500.00 labour - 30 hours at $150.00 per hour

3. $609.78 - parts

71. This amounts to a total loss of $8,098.45.

Order

72. The respondent is to pay to the applicants the sum of $8,098.45 within 14 days of the date of this decision.

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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: 29 April 2022