Lana Lien v Brarny Pty Limited trading as Sydney Prestige Motors and BMW Australia Limited

[2014] NSWCATCD 207

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:	Lana Lien v Brarny Pty Limited trading as Sydney Prestige Motors & BMW Australia Limited [2014] NSWCATCD 207
Hearing dates:	24 June 201430 September 2014
Decision date:	11 November 2014
Jurisdiction:	Consumer and Commercial Division
Before:	P. Boyce, Senior Member
Decision:	Application is dismissed
Catchwords:	Acceptable quality, liquidation of dealer, manufacturer liability
Legislation Cited:	Consumer Claims Act 1998 Australian Consumer Law Corporations Act 2001
Category:	Principal judgment
Parties:	Lana Lien (applicant) Brarny Pty Limited trading as Sydney Prestige Motors & BMW Australia Limited (respondent)
Representation:	Applicant in person Second respondent by its authorised agent at hearing and submissions by Mills Oakley Solicitors: First respondent: McBride Harle & Martin
File Number(s):	MV 14/08912
Publication restriction:	Unrestricted

REASONS FOR DECISION

1. The applicant is a consumer within the meaning of Section 3 of the Consumer Claims Act 1998.

2. The applicant brings this application against the first respondent, Brarny Pty Ltd trading as Sydney Prestige Motors and the second respondent BMW Australia Limited as suppliers within the meaning of s 3 of the Act.

3. The application falls within the definition of “consumer claim” under Section 3A of the Consumer Claims Act 1998.

4. The cause of action arose within the 3 years prior to the commencement of proceedings, and the claim is in respect of a used motor vehicle for private use and the claim is for less than $30,000.00.

5. The Tribunal is satisfied that it has jurisdiction under s 7 of the Consumer Claims Act 1998.

6. The orders sought by the applicant are within the orders available under s 8(1)(a) of the Act.

7. This is an application by a consumer applicant for a refund of the purchase price of a motor vehicle plus damages from the supplier first respondent or second respondent because the supplier has failed to comply with the consumer guarantee contained in s 54 of the Australian Consumer Law (“ACL”).

8. The applicant also alleges liability by s 271 of the ACL on the part of the second respondent, the manufacturer of the motor vehicle as the first respondent has failed to comply with the consumer guarantee contained in s 54 of the ACL.

9. The goods supplied to the applicant are a used 2008 model Mini Cooper S registered for private use which the applicant purchased from Sydney Prestige Motors on 7 September 2012.

The parties

10. On 7 September 2012 Arny’s Consulting Pty Ltd (called in these reasons “Arny’s”) was the registered holder of the business name “Sydney Prestige Motors” and the evidence before the Tribunal is that the payment for the motor vehicle was receipted by Sydney Prestige Motors.

11. To avoid confusion about the entities trading as Sydney Prestige Motors the Tribunal refers to the entity who was the supplier of the vehicle as “Arny’s trading as Sydney Prestige Motors”.

12. On the evidence before the Tribunal, the Australian Securities and Investments Commission received notice on 2 December 2013 that the Arny’s Consulting Pty Ltd resolved to be wound up upon a creditors’ resolution and a liquidator, Ozem Azzam Kassem of Cor Cordis Chartered Accountants was appointed on or about that day.

13. On further evidence before the Tribunal the first respondent became the holder of the business name “Sydney Prestige Motors” on 1 May 2013.

14. The second respondent is the importer of the motor vehicle and is deemed for the purposes of the ACL to be the manufacturer of the vehicle.

15. At the hearing:

1. In accordance with the directions of this Tribunal on 14 May 2014, the first respondent provided evidence that at the time of sale of the motor vehicle it had no connection with the business name “Sydney Prestige Motors”. On the correspondence before the Tribunal its solicitor made an assumption that it was not necessary for it to appear. The first respondent was not excused from appearance. It did not appear at the hearing.

2. However, the first respondent appeared on the second hearing day 30 September 2014.

3. The second respondent had leave granted to it to appear by telephone and provided a telephone number for the Tribunal to call its authorised officer. The Tribunal telephoned the number provided by the third respondent at 11:16 am and 11:30 am on the hearing date, 24 June 2014. The calls were answered by voice mail and the nominated officer was not able to be contacted. In proceedings before the Tribunal where leave is granted for a party to appear by telephone it is incumbent on that party to ensure that it is available at the time and date of the hearing on the telephone number nominated. In the absence of being able to be contacted, the Tribunal proceeded on the basis that there was no appearance by the second respondent.

4. The second respondent appeared on the second hearing day, 30 September 2014 by telephone.

5. On the first hearing day the applicant requested that the application proceed in the absence of the respondents on an ex parte basis.

6. The Tribunal is satisfied that the first and second respondents were given notice of hearing by the notice in writing from the Registrar on 22 May 2014.

7. The applicant was at the hearing ready to proceed with her application.

8. However the applicant sought to amend her application and the interests of justice would not have been served if a final determination was made on the amended application made in the absence of the respondents.

16. The effect of Arny’s Consulting Pty Ltd status as being in “external administration and /or controller appointed” and liquidator appointed is that s 500(2) of the Corporations Act 2001.

17. S 500(2) provides that:

After the passing of the resolution for voluntary winding up, no action or other civil proceeding is to be proceeded with or commenced against the company except by leave of the Court and subject such terms as the Court imposes.

18. There is no evidence before the Tribunal that the applicant has leave of the Court to proceed with or commence these proceedings and therefore cannot maintain this action against Arny’s.

19. The first respondent has placed before the Tribunal a declaration under oath that it acquired the business name on 1 May 2013 and had no interest in the business of Sydney Prestige Motors on 27 September 2012, the day the vehicle was supplied to the applicant.

20 The sales person who signed the contract of sale for the vehicle on behalf of Arny’s at the time of the sale of the vehicle to the applicant and who was nominated as the salesperson in the contract was Arnold ******* (Arnold”). Brendan ******** (“Brendan”) also signed the sales contract extending the cooling off period. The director of Arny’s was Arnold.

20. Brendan is the director of the first respondent.

21. Despite, Brendon being an employee of Arny’s and now a director of the first respondent. On the evidence before the Tribunal it is satisfied that the first respondent has no interest in these proceedings.

Applicant’s Evidence

22. On or about 7 September 2012 the applicant’s sworn evidence is that employees of Arny’s trading as Sydney Prestige Motors represented to the applicant that the vehicle that she was looking at was:

• The brakes and brake pads had been replaced on it;

• That the vehicle had a Peugeot engine and that it would last a long time;

• If an extended warranty was purchased with the vehicle any faults would be covered by that warranty;

• That if the transmission failed then it would be covered under any extended warranty;

• That the tyres had just been replaced with new tyres;

• That the “gas mileage” (fuel economy) was “one of the best that Arnold had driven and he [I] only fill it up every two weeks”;

• That the car was in great shape and the extended warranty would cover everything;

• The dealer’s representative made statement to the effect “…been driving it [him]self with [his] wife and kids and wouldn’t do so if the car wasn’t in excellent condition.”

23. The applicant entered into an agreement to purchase a 2008 Mini Cooper S with an odometer reading of 53,822 kilometres from Arny’s trading as Sydney Prestige Motors on the terms set out in a contract between them dated 7 September 2012 for a price of $26,000.00.

24. The contract tendered to the Tribunal includes a three year warranty from Sentinel Warranty Plan as an additional item.

25. The applicant paid the balance of the contract price 9 September 2012 plus stamp duty of $900.00 and Arny’s trading as Sydney Prestige Motors delivered to vehicle to the applicant on that day.

26. Within a week of purchasing the vehicle the window motors failed and the applicant spoke to Brendan. The fault was repaired by Arny’s under warranty. The applicant was without the vehicle for 5 days while it was repaired.

27. In October 2012 the air conditioning in the vehicle stopped working. The applicant spoke to Brendan and the condenser was replaced under the warranty. The applicant was without the vehicle for 10 days while it was repaired.

28. In December 2012 an engine warning light came on and the applicant spoke to Brendan. The applicant was directed by Brendan to take the vehicle to Arny’s repairer at Bankstown. The engine warning light was for a brake warning. The repairer checked the brakes and their pads and found they were satisfactory and he reset the warning light. The repairer did not provide the applicant with any documentation as to the works carried out.

29. In February 2013 the same engine warning light came on again. The applicant called Arny’s trading as Sydney Prestige Motors repairer who reassured her that the light was faulty and that it could be repaired at the next service of the vehicle.

30. The vehicle was serviced on 3 May 2013 by Arny’s repairer. An employee of the repairer other than the first employee that the applicant encountered advised the applicant that the brake pads were extremely worn out with only 25% remaining and that they needed to be replaced.

31. In May 2013 the vehicle became difficult to start and the running engine started to sound different like a diesel engine.

32. On 16 May 2013 the car only just started. The applicant replaced the battery at a cost of $220.00.

33. In September 2013 started to have the same starting difficulties and the engine noise became evident again.

34. On 29 October 2013 the applicant telephoned Sydney Prestige Motors and her call was not returned. She took the vehicle to an auto electrician at Randwick who ran a diagnostic test and the result was that the auto electrician found that there was a problem that he could not diagnose. The car was with the auto electrician for 3 days. The work cost the applicant $316.20.

35. The vehicle was parked in the applicant’s garage for 14 days.

36. On 19 November 2013, the vehicle was taken to an auto repairer at Randwick because the engine noise became worse and the vehicle was stalling. The auto repairer advised the applicant that she should not drive the vehicle as it was dangerous. The auto repairer charged the applicant $198.15. The invoice notes the odometer reading as 65100.

37. After calling Sydney Prestige Motors and its repairer the applicant was advised to tow the vehicle to the first respondent’s repairer at Bankstown at the applicant’s expense of $120.00.

38. The vehicle remained with the Sydney Prestige Motors repairer from 19 November 2013 until 6 December 2013. The water pump and rocker gasket were replaced and the throttle body was reset. The applicant paid $470.00 for resetting the throttle body and the repairer claimed the balance of any cost from the extended warranty. The repairer would not and did not provide the applicant with an invoice.

39. The applicant garaged the vehicle until 10 January 2014 when she returned it to the first respondent’s repairer after the Christmas holidays.

40. On 21 January 2014 the Sydney Prestige Motors repairer informed the applicant that he had taken the vehicle to Canterbury BMW to help diagnose the problem with the vehicle.

41. On 21 January 2014 the Canterbury BMW quoted $2,298.45 to perform a vehicle test, replace the timing chain and wheel alignment.

42. Despite telephoning Sydney Prestige Motors on a number of occasions it did not return her calls.

43. On or about 21 January 2014 the applicant requested a refund of the purchase price of the vehicle and damages from Sydney Prestige Motors. Sydney Prestige Motors denied and refused the applicants claim.

44. In the absence of the Sydney Prestige Motors accepting the applicants claim, the applicant authorised Canterbury BMW to proceed to carry out the works as quoted and in addition to replace the an air hose for an additional $505.00.

45. The vehicle remained with Canterbury BMW and on 19 February 2014 that company informed the applicant that despite replacing the timing chain and the air hose the vehicle was still not running properly.

46. The applicant commenced her claim against the respondents on 14 February 2014.

47. On 21 February 2014 the applicant was advised by Canterbury BMW that the high pressure fuel pump was broken and it would cost $1,700.00 to repair it.

48. The applicant has not authorised those repairs to be carried out.

49. The vehicle remains with Canterbury BMW and she has not had the use of the vehicle.

50. On 12 March 2014 Canterbury BMW offered the applicant $12,000.00 for the vehicle without repairing it as a trade in for a new vehicle.

51. The applicant also tenders to the Tribunal results of her research in relation to 2008 Model Mini Cooper S as follows:

• Timing chain issues from Australian, US and UK blog sites reporting the same issues that the applicant has experienced with the vehicle;

• A class action commenced in the United States District Court, District of New Jersey, Skeen & Freemen & on behalf of others v BMW North America, LLC, BMW (U.S.) Holding Corp & Bayerische Motoren Weke Aktiengesellschaft in which the plaintiffs claim, amongst other things, a breach of both express and implied warranties in respect of year model 2008 Mini Cooper R55 (being the model of vehicle purchased by the applicant) for a design flaw and defect that causes the timing chain tensioner to fail resulting in total loss of power;

• A draft safety recall letter from BMW Group Australia for the model of the applicant’s vehicle to replace the additional coolant pump on vehicles of the same model.

Repairer	Date	Cost
Z A Motor Repairs Padstowe –Brake pads	3 May 2013	551.00
Auto Fix Auto Elec Rosebery-Battery	16 May 2013	220.00
Randwick Auto Electrics-Battery Drain	1 November 2013	316.20
Randwick Car Care- service	22 November 2013	193.15
General Auto Padstow-Throttle body reset	6 December 2013	470.00
Towing from Randwick to Padstow	120.00
Total	1,870.35
Repairer and repair	Date	Cost ($)
Canterbury Mini Garage- replacing timing chain	21 January 2014	3,268.45
Canterbury Mini Garage-high pressure fuel pump	21 February 2014	1,250.00 (quoted)
Canterbury Mini Garage-air hose	505.00
Total	4,023.45

52. As at 24 June 2014 the vehicle has been off the road for repairs as for 255 days out of a total of 664 days of ownership. As at the second hearing date, 30 September 2014, the vehicle has been off the road for 353 days of 762 days of the applicant’s ownership.

53. Without the vehicle the applicant has rented vehicles and claims the cost as follows:

54. The applicant also claims the cost of insuring the vehicle while the vehicle has been at the repairers in the sum of $432.03.

55. The applicant also claims the cost of the repairs that she has paid for, not otherwise indemnified by the extended warranty in summary:

56. Additional work has been carried out on the vehicle, invoiced to Sydney Prestige but not paid for as follows:

Findings

57. The ACL s 54 provides a consumer with a guarantee that goods sold will be of an acceptable quality if they are fit for purpose for which they are commonly supplied, are of an acceptable quality and finish, free from defects, safe and durable as a reasonable consumer fully acquainted with the state and condition of the goods would regard as acceptable.

58. S 54 sets out the criteria to determine acceptability having regard to their nature, the price and any statements made about the goods by a supplier or manufacturer.

59. There is no dispute that the goods referred to in s 54 is the motor vehicle supplied by Arny’s trading as Sydney Prestige Motors to the applicant. As that entity is in external administration having had a liquidator appointed, the applicant cannot maintain her claim against that entity without leave of the Court.

60. The issue before the Tribunal is the first and second respondent has any liability to the applicant that the vehicle was not of an acceptable quality within the meaning of s 54(2) of the ACL.

61. If that were to be maintained, it is necessary to consider the relevant criteria of acceptability, that is:

(a) The price of the vehicle being $26,000.00;

(b) That the vehicle was a used vehicle when it was purchased;

(c) That the first problem with the vehicle arose within a week of delivery to the applicant;

62. The time for determination about whether the goods are of acceptable quality is when the goods are supplied to the consumer.

63. The evidence of the applicant is that problems started after the first week of ownership of the vehicle.

64. The start of the problems with the vehicle is sufficiently proximate to the supply date to find it was not of acceptable quality at the supply date.

65. The vehicle has been little used by the applicant. It has been at the repairers or garaged by the applicant for almost one year.

66. The issue for the Tribunal is to ascertain whether a hypothetical reasonable consumer as referred to in s 54(2) of the ACL who purchased a vehicle, having paid the price paid by the applicant would regard the vehicle as being of an acceptable quality having regard to the alleged latent and patent defects present with the vehicle.

67. The supplier of the vehicle, Arny’s Consulting Pty Ltd ABN 53 103 545 900 trading as Sydney Prestige Motors did little to assist the applicant in having the vehicle repaired during the period of three months warranty.

68. The applicant rejected the vehicle on or about 21 January 2014 being frustrated in her attempts to have the vehicle repaired under the statutory guarantee.

69. The recurring problems have now caused the vehicle to be located at Canterbury BMW with neither the first or the second respondent accepting liability for carrying out the repairs. The vehicle remains in the possession of Canterbury BMW.

70. Arny’s trading as Sydney Prestige Motors is no longer able to comply with the guarantee under the ACL.

71. Therefore it is not ready and willing to comply with the guarantee contained in s 54 of the ACL in relation to the vehicle.

72. Having made that finding the Tribunal must determine what, if any, remedy is available to the applicant.

73. S 259 provides that if the failure to comply with a guarantee cannot be remedied and is a major failure the consumer may reject the goods and recover compensation for any loss or damage suffered by the consumer as a result of the failure to comply with the guarantee if it was reasonably foreseeable that the consumer would suffer loss or damage.

74. A major failure under the ACL is defined by s 260 (c) as “goods that are substantially unfit for a purpose for which goods of the same kind are commonly supplied and they cannot, easily and within a reasonable time, be remedied to make them fit for a purpose”.

75. The applicant’s evidence supports her claim that the defects substantiate a claim that the vehicle is substantially unfit for the purpose for which the vehicle is commonly supplied.

76. S 261 of the ACL sets out the remedies available to a supplier as:

(b) “If the failure does not relate to title-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

(ii) An amount that is equal to the value of any other consideration provided by the consumer for the goods.”

77. S 271 of the ACL permits the applicant to recover damages from the second respondent where the guarantee in s 54 is not complied with.

78. The exemption to liability in s 271(2) of the ACL applies when a representation is made by someone other than the manufacturer, the evidence is that representations were made to the applicant by a representative of supplier as to the acceptable quality of the vehicle.

79. The motor vehicle, on the evidence adduced by the applicant which is accepted by the Tribunal, is that the vehicle had inherent problems that the supplier, Arny’s Pty Limited was patently aware of and failed to act to remedy that defect.

80. The applicant in her uncontested sworn evidence has established that she has suffered loss and damages because of the failure to comply with the guarantee.

81. But for the external administration of the supplier, Arny’s Consulting Pty Ltd ABN 53 103 545 900 trading as Sydney Prestige Motors, the Tribunal would have allowed the applicants claim and awarded her damages as they were a reasonably foreseeable consequence of her being unable to use the motor vehicle because of the defects in it.

82. The application against the first respondent Brarny Pty Ltd is dismissed as it played no part in the supply of the vehicle.

83. The application against the second respondent BMW Australia Limited is dismissed as it is exempted from liability under s 271(2)(a) as representations as to the acceptable quality of the vehicle were made to the applicant by a representative of Arny’s Pty Limited as to the acceptable quality of the vehicle

84. Had it not been for the liquidation and the external administration of Arny’s Pty Limited the Tribunal would have made orders that Arny’s Pty Limited pay to the applicant damages, made up of:

• Loss of value in vehicle (as determined by trade in value offered by Canterbury BMW 12 March 2014) ($26,900-12,000) $14,900.00;

• The cost of insurance while the vehicle in control of second respondents agent $432.03;

• The amount paid for the repairs to the vehicle $1,870.35;

• Cost of repairs and quoted@ Canterbury Mini Garage $4,023.45

• Cost to the applicant for rental vehicles $7,205.05;

• Total claim $28,421.88

85. It may be that the applicant could make a claim with and the Tribunal draws the applicant’s attention to the NSW Motor Dealers Compensation Fund.

86. The applicant will need to pay for the repairs to have the vehicle released to her by Canterbury Mini Garage. The cost of the repairs is included in the list of damages the Tribunal would have ordered.

(signed)

P Boyce

Senior Member

Civil and Administrative Tribunal of New South Wales

11 November 2014

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: 05 February 2015