Jacob Logan v Fiat Chrysler Australia
[2022] QCAT 256
QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL
CITATION:
Jacob Logan v Fiat Chrysler Australia [2022] QCAT 256
PARTIES:
JACOB LOGAN (applicant)
v
FIAT CHRYSLER AUSTRALIA (respondent)
APPLICATION NO:
MVL234-20
MATTER TYPE:
Motor vehicle matter
DELIVERED ON:
13 July 2022
HEARING DATE:
24 June 2022
HEARD AT:
Brisbane
DECISION OF:
Member McVeigh
ORDERS:
1. The respondent must pay the applicant $12,000.
2. The respondent must reimburse the applicant:
(a) $352 filing fee; and
(b) $600 contribution to the independent assessor’s fee.
CATCHWORDS:
TRADE AND COMMERCE – COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION – CONSUMER PROTECTION – GUANTEES, CONDITIONS AND WARRANTIES IN CONSUMER TRANSACTIONS – whether the vehicle was of acceptable quality at the time of supply – where the vehicle had a hidden manufacturing defect – where the independent assessor’s opinion was that the engine should be replaced – whether there was a major failure – whether the applicant had caused the vehicle to be of unacceptable quality by failing to adhere to the service requirements
Australian Consumer Law, s 54, s 236, s 271, s 272, s 273 Competition and Consumer Act 2010 (Cth), Schedule 2
Fair Trading Act 1989 (Qld), s 50A
Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 9
Australian Rong Hua Fu Pty Ltd v Ateco Automotive [2015] VCAT 756 at [42]
APPEARANCES & REPRESENTATION:
Applicant:
Self-represented
Respondent:
Self-represented
REASONS FOR DECISION
Background
In June 2015[1] Jacob Logan, the applicant in these proceedings, bought a second-hand Chrysler 300 SRT8 sedan (the vehicle) from Caroline Springs Chrysler Jeep Dodge (the dealer) in Victoria. His evidence was that he paid $59,038 for the vehicle. The contract of sale was not in evidence.
[1]As set out in the application.
Mr Logan had the vehicle transported to the Gold Coast. As has been the case for other owners of similar vehicles, he experienced ongoing, but intermittent, issues with loss of power. He took his vehicle to Gold Coast Chrysler Jeep Dodge (the Gold Coast dealer) numerous times; however, the mechanics could not diagnose the reason for the problem. He also had the vehicle serviced at the Gold Coast dealer.
In September 2018 the Gold Coast dealer removed the right-side cylinder head bank rocker cover, right side cylinder head, the camshaft and the left bank cylinder head and inspected the parts of the engine that had been revealed. On 24 September 2018, the Gold Coast dealer made a request to Fiat Chrysler Australia (FCA or respondent) for goodwill assistance for required engine repairs which involved replacement of the long block, water pump and radiator at an estimated cost of $12,000.
On 9 October 2018 FCA rejected the request on the basis that the applicant had not correctly serviced the vehicle.
The applicant left the vehicle at the Gold Coast dealer’s yard.
On 24 October 2018 Mr Logan filed an application for a minor civil dispute in this tribunal seeking orders that FCA:
Perform the supply and replacement of parts, or a full vehicle replacement.
Repair the vehicle at no extra cost…
In December 2018, while the vehicle remained at the Gold Coast dealer’s yard, the vehicle was damaged in a hail storm.
QCAT received written submissions from FCA filed in the minor civil dispute on 18 July 2019. FCA submitted, inter alia:
The respondent is the importer of the vehicle and therefore stands in the shoes of the manufacturer. The respondent was not the supplier of the vehicle to the applicant…
…
… the vehicle’s factory warranty period had expired…
…
… the respondent assumes that the applicant’s claims relate to sections 54 and /or 55 of the Australian Consumer Law (ACL), claiming that the vehicle is not fit for the disclosed purpose and/or is not of acceptable quality…
…
As the applicant did not attend the minor civil dispute hearing scheduled for 18 July 2019 the application was dismissed.
On 5 November 2020, some fifteen and a half months after the minor civil dispute claim was dismissed, Mr Logan filed a motor vehicle dispute application in this tribunal. He sought the following orders:
The cost of a replacement vehicle $85,000
Reimbursement for costs associated with hire vehicles over the past 18 months that this has been ongoing $6,000
Hail damage and associated costs $5,599.
At a directions hearing Member Bertelsen decided that QCAT had jurisdiction to hear the motor vehicle dispute application as it did not contain the same subject matter as the minor civil dispute which had not been heard or determined on the merits. FCA did not appeal that decision.
The motor vehicle dispute application came on for hearing before me on 24 June 2022.
Applicant’s material
The applicant relied on:
(a)the application, which attached the minor civil dispute application and attachments;
(b)a bundle of letters and emails that relate to vehicles with similar engine problems;
(c)a copy of the loan contract, but not the original contract of sale;
(d)a quote for a replacement vehicle;
(e)a quote to repair the hail damage.
Assessor’s report
The tribunal appointed an independent assessor, Thomas Kovalev. He conducted an assessment on 15 December 2021.[2] He identified the following defects:
a) Seized needle bearing roller on one hydraulic lifter assembly. Suspect lifter assembly corresponds to cylinder 5 intake valve …
b) Damaged camshaft, 11th lobe. Suspect camshaft lobe corresponds to cylinder 5 intake valve.
[2]Exhibit 1.
In his opinion the likely cause of the defect was:
…
c) Internal engine component failure Damage to camshaft lobe number 11 is likely caused by the seized needle bearing roller on the corresponding hydraulic lifter assembly.
The failure of the needle bearing roller is likely caused by:
a) Manufacturing defect
b) Insufficient oil lubrication due to low oil pressure or an oil viscosity issue.
He concluded that the cause of the failure was a manufacturing defect. He observed:
- No mention of oil leaks or issues with low oil by technicians during diagnoses after failure or such comments during prior services.
- This vehicle is fitted with an oil pressure sensor. There are no reported fault codes relating to low oil pressure in technicians report after failure has occurred.
- No evidence of oil viscosity issues were found. Specifically, no apparent damage was found with the hydro dynamic camshaft bearings which are highly susceptible to viscosity issues as opposed to the needle roller bearing that failed (see figure 4).
- No evidence of engine oil sludge build-up in any components inspected nor any blockages were found in the oil supply galleries to the valve train components (see figure 5).
- Only one out of 16 needle bearing rollers were found to be seized with no evidence of wear or damage to the remaining 15 roller bearings.
Based on these observations it is unlikely that the cause of failure was due to insufficient oil lubrication, low oil pressure or viscosity issues. As such it is my opinion that the cause of failure was a manufacturing defect which led to premature failure of the needle bearing roller on one hydraulic lifter assembly, which in turn led to damage of the 11th camshaft lobe.
He concluded:
To rectify the current defect with the valve train, the camshaft and hydraulic lifter assemblies will require replacement along with respective gaskets, seals and consumables. Cylinder heads and valve and spring operation will need to be checked and serviced specifically with any issues addressed accordingly. Sump pan, oil pickup and oil pump will need to be inspected for debris from camshaft and rectified accordingly. These repairs are estimated to take 18 hours to complete.
Neither party provided any expert evidence to challenge the assessor’s report. I accept his opinion.
Respondent’s material
The respondent filed comprehensive written submissions on 28 February 2022.
Issues
The respondent’s submissions raise the following issues for determination:
(a)whether QCAT has jurisdiction;
(b)whether the applicant’s claim is out of time;
(c)whether the applicant has a remedy against the respondent under the Australian Consumer Law (Queensland) (ACL) which involves consideration of;
(i) whether the vehicle was of acceptable quality at the time of supply;
(ii) whether the applicant caused the vehicle to be of unacceptable quality;
(d)whether the applicant has a claim against the manufacturer for refund or a replacement;
(e)if the claim is made under section 262 of the ACL and if there is a major failure, whether the applicant rejected the vehicle during the rejection period;
(f)if the respondent is obliged to provide a supplier-based remedy, whether the applicant is entitled to a new replacement vehicle, alternatively a full refund;
(g)if the applicant is entitled to damages under section 272 of the ACL, whether the damages he claims are reasonably foreseeable;
(h)whether the applicant failed to mitigate his alleged losses;
(i) by failing to repair the vehicle himself in 2018 and claiming those costs against the supplier;
(ii) by failing to attend the hearing of the minor civil claim;
(iii) by waiting 17 months to file this application after the minor civil claim was dismissed.
Jurisdiction
It is common ground that the contract of sale for the vehicle was made in Victoria.
Section 9 of the Queensland Civil and Administrative Tribunal Act 1991 (Qld) provides:
(1) The tribunal has jurisdiction to deal with matters it is empowered to deal with under this Act or an enabling Act.
…
(3) Without limiting the Acts Interpretation Act 1954, section 49A, an enabling Act confers jurisdiction on the tribunal to deal with a matter if the enabling Act provides for an application, referral or appeal to be made to the tribunal in relation to the matter.
…
The Fair Trading Act 1989 (Qld) is an enabling Act.Section 50A(1) of the Fair Trading Act 1989 (Qld) provides:
A person may apply, as provided under the QCAT Act, to the tribunal for an order mentioned in subsection (2) for an action—
(a) under a provision of the Australian Consumer Law (Queensland) listed in the table to this section; and
(b) relating to a motor vehicle; and
(c) seeking an amount or value of other relief of not more than $100,000.
The following relevant sections of the Australian Consumer Law (Queensland) are listed in the table:
(a)section 236(1) – actions for damages;
(b)section 259(2), (3) and (4) – actions against suppliers
(c)section 271(1), (3) and (5) - action for damages against manufacturers of goods
(d)section 279(1) - action by consumer to recover amount of loss or damage.
The respondent submits that the applicant cannot get the remedies he seeks from this tribunal because those remedies are only available against a supplier, not the manufacturer. Had the applicant filed a claim against the dealer, this submission may have had some force. However, the claim is made against the importer of the vehicle, standing in the shoes of the manufacturer. Section 50A(1) of the Fair Trading Act 1989 (Qld) gives the applicant the right to make a claim relating to a motor vehicle seeking an amount of not more than $100,000 against the manufacturer under section 271(1), (3) and (5) of the Australian Consumer Law (Queensland) and a right to claim damages under section 236(1).
I find that there is jurisdiction to hear this matter.
Is the applicant’s claim out of time?
The respondent submitted that when this claim was filed on 5 November 2020 it was time barred under the Australian Consumer Law (Queensland).
Section 273 of the Australian Consumer Law (Queensland) provides:
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.
The respondent submits that the applicant:
(a)first presented the vehicle losing power to the Gold Coast dealer on 4 August 2015;
(b)stated that he became aware the vehicle was nonresponsive on 13 August 2015;
(c)again, presented the vehicle to the Gold Coast dealer complaining that the vehicle was losing power on 27 July 2016, 12 December 2016, 8 February 2017 and 8 March 2018.
The respondent submitted that taking the most favourable view, the applicant should reasonably have become aware that the guarantee had not been complied with by 8 February 2017, i.e., over three years before this application was filed.
An alternative approach is to consider the question looking backward, in which case the applicant must show that he did not become aware, or could not reasonably have become aware, that the guarantee had not been complied with before 5 November 2017, the date three years before he filed this application.
While there is no doubt that since 2015 the applicant knew that the vehicle was not always functioning as it should, until the Gold Coast dealer inspected the engine in September 2018, the applicant could not reasonably have become aware that the guarantee had not been complied with. The Gold Coast dealer was unable to diagnose any fault in the vehicle each time it was presented, until it removed the right-side cylinder head bank rocker cover, right side cylinder head, the camshaft and the left bank cylinder head in September 2018, therefore it cannot be the case that a reasonable person could have been aware of the hidden manufacturing fault in the engine before September 2018.
For completeness, I note that it was not until December 2021, more than one year after the application was filed, that it was expressly known, via the report of the independent assessor, that the cause of the failure was a manufacturing defect.
I find that a reasonable person could not have been aware of the hidden manufacturing fault in the engine of this vehicle until September 2018. Therefore, I find that this application was commenced within three years of the applicant becoming aware of that the guarantee had not been complied with.
Does the applicant have a remedy against the respondent under the ACL?
Section 271(1) of the Australian Consumer Law (Queensland) provides:
Action for damages against manufacturers of goods
(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.
Section 54 of the Australian Consumer Law (Queensland) provides:
Guarantee as to acceptable quality
(1) If:
(a)a person supplies, in trade or commerce, goods to a consumer; and
(b)…
there is a guarantee that the goods are of acceptable quality.
(2) Goods are of acceptable quality if they are as:
(a)fit for all the purposes for which goods of that kind are commonly supplied; and
(b)acceptable in appearance and finish; and
(c)free from defects; and
(d)safe; and
(e)durable;
as a reasonable consumer fully acquainted with the state and condition of the goods (including any hidden defects of the goods), would regard as acceptable having regard to the matters in subsection (3).
(3) The matters for the purposes of subsection (2) are:
(a)the nature of the goods; and
(b)the price of the goods (if relevant); and
(c)any statements made about the goods on any packaging or label on the goods; and
(d)any representation made about the goods by the supplier or manufacturer of the goods; and
(e)any other relevant circumstances relating to the supply of the goods.
(4) …
(5) ….
(6) Goods do not fail to be of acceptable quality if:
(a)the consumer to whom they are supplied causes them to become of unacceptable quality, or fails to take reasonable steps to prevent them from becoming of unacceptable quality; and
(b)they are damaged by abnormal use.
(7) …
The respondent submitted that the vehicle was of acceptable quality at the time of supply. It submitted that the test of acceptable quality is of a hypothetical reasonable consumer fully acquainted with the state and condition of the goods at the time of supply. Relying on Australian Rong Hua Fu Pty Ltd v Ateco Automotive,[3] it submitted that a vehicle will still be of acceptable quality if it has minor failures which can be remedied quickly, often addressed through repair during the manufacturer’s warranty period.
[3][2015] VCAT 756 at [42].
At the time of supply the vehicle was not free from defects. The independent assessor identified a defect in the manufacture of the vehicle which led to premature failure of the needle bearing roller on one hydraulic lifter assembly, which in turn led to damage of the 11th camshaft lobe. No reasonable consumer would regard a vehicle with a hidden defect in the engine as acceptable. It is not reasonable to expect that a consumer will remove parts of the engine to identify hidden manufacturing defects.
The respondent submitted that notwithstanding it is likely that the engine needs to be replaced the vehicle does not exhibit a major failure. It submitted that an engine replacement is not an overly complex repair to make. I reject this submission. A vehicle that requires an engine replacement due to a manufacturing defect cannot be said to be fit for purpose. In 2018 the Gold Coast dealer estimated the repair cost at $12,000. In 2021 the independent assessor estimated it would take 18 hours to complete the necessary repairs. The cost of repairs and the significant time to carry out the repairs support my conclusion that the failure was not minor in nature.
I also reject the respondent’s submission that the applicant failed to take reasonable steps to prevent the vehicle from becoming of unacceptable quality by failing to adhere to the servicing requirements. Nothing the applicant did, or did not do, caused the vehicle to become of unacceptable quality. The defect was present at the time of manufacture. No amount of servicing could have prevented a defect in the manufacturing of the vehicle.
I find that the applicant has a remedy against the respondent under section 271(1) of the ACL because the vehicle was not of acceptable quality as it had a hidden manufacturing defect.
Does the applicant have a claim against the manufacturer for refund or a replacement?
The only remedy available in a claim against the manufacturer under section 271 of the ACL is a claim for damages. Although the applicant claimed for the cost of a replacement vehicle it is not a remedy available to him against the respondent.
Did the applicant reject the vehicle during the rejection period?
The issue of rejection is only relevant to a claim against a supplier under section 259 of the Australian Consumer Law (Queensland). The applicant does not claim against the supplier. He claims against the respondent which stands in the shoes of the manufacturer. Hence the question of whether or not the vehicle was rejected within the rejection period prescribed by section 259 of the Australian Consumer Law (Queensland) is irrelevant.
Are the damages claimed reasonably foreseeable?
Section 236 of the Australian Consumer Law (Queensland) provides:
Actions for damages
(1) If:
(a)a person (the claimant) suffers loss or damage because of the conduct of another person; and
(b)the conduct contravened a provision of Chapter 2 or 3;
the claimant may recover the amount of the loss or damage by action against that other person, or against any person involved in the contravention.
Section 272 of the Australian Consumer Law (Queensland) provides:
Damages that may be recovered by action 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.
(2) Without limiting subsection (1)(b), the cost of inspecting and returning the goods to the manufacturer is taken to be a reasonably foreseeable loss suffered by the affected person as a result of the failure to comply with the guarantee.
(3) Subsection (1)(b) does not apply to loss or damage suffered through a reduction in the value of the goods.
While the applicant’s claim does not expressly use the word damages, his claims (set out below) are all money claims, effectively claims for damages:
(a)the cost of a replacement vehicle $85,000;
(b)reimbursement for costs associated with hire vehicles over the past 18 months that this has been ongoing $6,000; and
(c)hail damage and associated costs $5,599.
I find that if an engine has a hidden manufacturing defect it was reasonably foreseeable that the owner’s loss would be the cost of the replacement engine.
I find that the applicant is entitled to recover the cost of replacing the engine. The only evidence I have of that cost is the Gold Coast dealer’s estimate of $12,000. While I appreciate that the cost of replacing an engine is likely to be more than the cost estimate provided in 2018, I have no other evidence on which I can assess the damages.
The respondent submitted that it should not have ‘to refund’ the applicant an amount equal to a new replacement vehicle considering that the applicant purchased the vehicle second hand for $56,500 in 2014. It submitted that it would be unjust to order the respondent to pay the applicant more than $30,000 than he had paid for the vehicle when he had the use of the vehicle for 3 years and when he failed to store the vehicle to prevent damage. I accept those submissions. The applicant cannot be put in a better position now than he would have been in had the vehicle not had a manufacturing defect. He is not entitled to recover the cost of a new vehicle when he purchased a second-hand vehicle.
I am not satisfied that the applicant has discharged the onus of proving his claim for reimbursement for costs associated with hire vehicles. He provided a copy invoice relating to hire of a vehicle from Tullamarine airport. Obviously, a vehicle hired in Victoria cannot replace a vehicle in Queensland. He also provided a letter from Avis regarding non-payment of rental charges. As the applicant did not pay Avis, he did not suffer a loss.
Nor am I satisfied that the applicant is entitled to recover the estimated cost for repair of the hail damage. The hail damage did not occur because of the conduct of the respondent in breaching the statutory guarantee. Accordingly, it is not a claim that can be maintained under Section 236 of the Australian Consumer Law (Queensland).
Did the applicant fail to mitigate his loss?
The respondent’s submissions regarding mitigation all go to the delay in the proceedings for which the applicant bears responsibility. However, as the applicant did not provide any evidence of current costs of repair and hence did not recover the current cost of repairs and as he did not succeed in his other claims it is not necessary to consider the impact of delay on the damages awarded.
Orders
1. The respondent must pay the applicant $12,000.
2. The respondent must reimburse the applicant:
(a) $352 filing fee; and
(b) $600 contribution to the independent assessor’s fee.
0
0
0