Pate v Neich Holdings Pty Ltd t/as Sydney Vehicle Sales

[2018] NSWCATCD 16

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Pate v Neich Holdings Pty Ltd t/as Sydney Vehicle Sales [2018] NSWCATCD 16

Hearing dates:

28 September 2017; 21 December 2017

Date of orders:

07 May 2018

Decision date:

07 May 2018

Jurisdiction:

Consumer and Commercial Division

Before:

G.J Sarginson, Senior Member

Decision:

(1)   The respondent, Neich Holdings Pty Ltd t/as Sydney Vehicle Sales is to pay the applicant Lindsay Pate $500.00 immediately.

 

(2)   The respondent is to repair the vehicle the respondent sold to the applicant Ford Ranger Registration Number XXX XXX-XXX XXXXX XXXXX XXXXX XX using suitably licensed tradespersons and with due care and skill as follows:

 

(a)   Remove any rust from the floorpan of the vehicle.

 

(b)   Remove any rust from the chassis of the vehicle.

 

(c)   Remove any rust from the suspension components of the vehicle.

 

(d)   Remove any rust from mudguards and lower sills of the vehicle.

 

(e)   Replace any bolts or fittings on the floorpan, suspension, and chassis of the vehicle that are significantly rust affected and require replacement.

 

(f)   Apply an anti-corrosive/anti-rust treatment to the floorpan, chassis, mudguards, suspension components, and lower sills of the vehicle.

 

(g)   Repair and repaint any sections of sills and mudguards that have had rust removed.

 

(3)   The repairs in order 2 above are to be completed on or before 5 weeks from the date of this decision.

 (4)   In respect of the repairs in order 2 above, the applicant is to make the vehicle available for collection by the respondent. The respondent is to arrange collection and return of the vehicle to the applicant. The cost of repairs (including collection and return of the vehicle) is to be the responsibility of the respondent.

Catchwords:

Consumer Claim---Motor vehicles---Whether vehicle of acceptable quality---Whether misleading or deceptive conduct by motor dealer---Modification and damage to vehicle after purchase---Remedies---Repair to vehicle---Scope of order

Legislation Cited:

Australian Consumer Law 2010
Civil and Administrative Tribunal Act 2013
Fair Trading Act 1987
Motor Dealers and Repairers Act 2013

Cases Cited:

Australian Rong Hua Fu Pty Ltd v Ateco Automotive [2015] VCAT 756
Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592
Howe v Teefy (1927) 27 SR (NSW) 301
Lam v Steve Jarvin Motors Ltd [2016] NSWCATAP 186
McCrohon v Harith [2010] NSWSC 67
Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited [2010] HCA 31; (2010) 241 CLR 357
Perpetual Trustee Company Ltd and Anor v Ishak [2012] NSWSC 697
Safi v Heartland Motors Pty Ltd t/as Heartland Chrysler [2016] NSWCATAP 80

Category:

Principal judgment

Parties:

Applicant: Lindsay Pate

  Respondent: Neich Holdings Pty Ltd t/as Sydney Vehicle Sales

Representation:

Applicant: In person

  Respondent: Mr Neich, director

File Number(s):

MV 17/22174

Publication restriction:

Nil

REASONS FOR DECISION

1. The dispute involves a 2013 model Ford Ranger XL Crew Cab vehicle the applicant purchased from the respondent for $35,000.00 on 16 December 2016. The respondent is a licensed motor dealer based in Sydney, NSW. The applicant resides near Cooma NSW.

2. The applicant filed proceedings in the Tribunal on 16 May 2017. The proceedings were listed for a Group List and Conciliation hearing on 5 June 2017. The parties were unable to resolve their dispute, and the matter was set down for a hearing with directions that relevantly included the filing and serving of documentary evidence.

3. The matter was listed for hearing on 28 September 2017. At that hearing, the applicant appeared in person. Mr Neich, director of the respondent, appeared. Mr Lynch, Solicitor, sought leave to represent the respondent in the proceedings. The applicant opposed the respondent being legally represented in the proceedings. The Tribunal refused the application for leave for the respondent to be legally represented under s 45 of the Civil and Administrative Tribunal Act 2013, on the basis that the issues in dispute were not sufficiently complex and that, considering the amount in dispute exceeded $30,000.00, the grant of legal representation would, if the applicant was unsuccessful in the proceedings, have implications on the issue of costs by reason of Reg 38 of the Civil and Administrative Tribunal Regulations 2014.

4. At the hearing on 28 September 2017, there was a dispute between the parties regarding the applicant filing and serving documentary evidence late, and the respondent not having the opportunity to have the vehicle inspected and obtain an expert report. The Tribunal heard as much evidence regarding the issues in dispute on 28 September 2017 as was practical to do so, and adjourned the matter part heard. Directions were made regarding the filing and serving of evidence, and making the applicant making the vehicle available for inspection so that the respondent could obtain expert evidence regarding the condition of the vehicle.

5. The hearing concluded on 21 December 2017. At that hearing, the applicant appeared in person and Mr Neich appeared in person. Neither party called witnesses at the hearings on 28 September 2017 or 21 December 2017.

ISSUES IN DISPUTE AND ORDERS SOUGHT BY THE APPLICANT

6. The key issue in dispute involves corrosion to parts of the vehicle including the suspension, floor pan, and chassis. The applicant raises other mechanical issues with the vehicle, but the focus of his case was that the vehicle has excessive corrosion for a vehicle of like age and kilometres travelled. The applicant asserts that the vehicle was used as a “mining vehicle” prior to being purchased by him, and it is the vehicle’s use as a mining vehicle which has caused the level of corrosion. The applicant asserts that the respondent should have disclosed that the vehicle had been used as a mining vehicle and if it had done so, he would not have purchased the vehicle.

7. There is no dispute that after purchase of the vehicle the applicant arranged for modifications to the vehicle, including installation of a “tipper” behind the cab of the vehicle. There is also no dispute that the applicant has used the vehicle to drive off road to collect firewood.

8. The applicant seeks damages or compensation of $40,000.00 with the vehicle to be returned to the respondent.

9. The application filed with the Tribunal does not clearly identify what his cause of action is based upon. However, the issues in dispute raise the following potential causes of action for consideration:

• Whether the respondent engaged in misleading or deceptive conduct, or conduct likely to mislead or deceive, under s 18 of the Australian Consumer Law 2010 (‘the ACL’).

• Whether the respondent breached any of the consumer guarantee provisions of the ACL (in particular, the guarantee under ss 54 of the ACL).

• Whether the condition of the vehicle constituted a “major failure” under s 260 of the ACL and whether the applicant had rejected the vehicle within a reasonable period under s 262 of the ACL.

DOCUMENTAY EVIDENCE OF THE APPLICANT

10. The applicant’s documentary evidence can be summarised as follows:

1. A report by Mr Shane Crowe of Crowe Engineering & Machining Pty Ltd dated 19 October 2017.

2. A tax invoice of National Automotive Electrical & Mechanical Services dated 20 October 2017.

3. Service records of the vehicle for the period from 20 May 2013 to 28 July 2016 from Highway Ford, a motor vehicle dealership at Rutherford, NSW and Kloster Ford, a motor vehicle dealership at Hamilton NSW.

4. Numerous photographs of the vehicle, in particular the suspension components and chassis of the vehicle.

5. An undated report of Mr Ray Galvin (Workshop Foreman) and Mr Jim Darley (Fixed Operations Manager) of Alpine Motor Group Cooma.

6. A “quotation” (in the form of a brief report) of Mr Paul Rees of Rees Automotive Repairs dated 19 April 2017.

7. An “estimate” of Nick Tonini of Cooma Crash Repairs dated 10 April 2017.

8. A brief report of Mr Douglas Arnold, Summit Smash Repairs dated 12 April 2017.

9. A report of Mr Garry Cornish, Monaro Discount Tyres, dated 13 June 2017.

10. Emails between the applicant and Mr Neich during the period between 28 November 2016 and 15 March 2017.

11. The Dealer Notice under the Motor Dealers and Repairers Act 2013 attached to the vehicle and provided to the applicant in respect of the sale dated 16 December 2016. Relevantly, the dealer notice states:

• The vehicle had travelled 105,547 klms

• The sale price was $35,000.00.

12. The written contract for the sale of the vehicle dated 16 December 2016. Relevantly, the sale price is identified as $35,000.00, including “side steps and bash bars; 2 inch lift kit; and tyre and wheel package”.

13. The vehicle was sold with a warranty under the Motor Dealers and Repairers Act 2013 of 3 months or 5,000 klms, whichever came first.

14. In Section 2 of the document (‘the dealer notice’), under the heading “Important Information About This Motor Vehicle” which states: “Where applicable, the motor dealer must disclose important facts about this vehicle that may impact its monetary value” in response to the question “This vehicle has had significant damage caused by exposure to water”; the answer “No” is circled. In the section of Section 2 of the document that states; “Other-provide information:” the document is blank.

15. A certificate for registration from Roads and Maritime Services (‘RMS’) NSW with a payment date of 15 February 2017. The vehicle was registered for 12 months. The “conditions and information” section of the document states: “Usage: Business-General. Drop Sides Fitted”.

16. An NRMA CTP Green Slip dated 15 February 2017. Relevantly, the document states that the “use” of the vehicle is “Business”.

17. Various invoices for the cost of obtaining reports from mechanics.

18. A letter and ledger statement from Esanda Finance, the finance provider for the purchase of the vehicle, dated 1 June 2017. Relevantly, the letter states the payout figure for the loan as of 1 June 2017 is $37,143.53.

19. Various undated written statements of the applicant identifying what the photographs provided referred to; and the reasons why the applicant should obtain the orders sought in the proceedings. Unfortunately, the applicant did not provide a comprehensive written statement setting out the relevant events that occurred. However, the applicant gave oral evidence to the Tribunal in this regard, and was cross examined.

DOCUMENTS OF THE RESPONDENT

11. The respondent’s documents can be summarised as follows:

1. A letter of instruction to its expert Mr Mario Savvides of 5A Mechanical Repairs (undated).

2. A brief report of Mr Mario Savvides of 5A Mechanical Repairs dated 10 October 2017.

3. Written submissions referring to “inadmissible evidence” of the applicant. In particular, the respondent objected to the documents of Highway Ford.

4. Emails of Mr Neich to LeasePlan Australia in August 2017. LeasePlan Australia was the owner of the vehicle when it was serviced by Highway Ford. Relevantly, LeasePlan Australia stated it could not provide information due to privacy reasons, but the vehicle was sold by LeasePlan Australia through Pickles Auctions in an “as is” condition.

5. Written notes of a telephone conversation Mr Neich had with Mr Paul Thompson, Service Manager at Highway Ford, on 29 August 2017.

6. An RMS NSW Vehicle History Report dated 20 March 2017 for the vehicle the subject of this dispute.

7. An affidavit of Mr Neich dated 12 September 2017.

8. Emails between Mr Neich and Mr Crowe of Crowe Engineering & Machining Pty Ltd between 8 August 2017 and 17 August 2017 regarding installation of the tipper on the vehicle.

9. A letter from Mr Adam Wilson of Ad-Fitt Pty Ltd (undated) regarding how a tipper unit is installed on a vehicle with a rear tray.

10. Emails between Mr Neich and RMS NSW Technical Enquiries dated 2 June 2017 regarding the installation of a tipper on a light vehicle cab chassis and whether or not a compliance certificate by a licenced certifier would be required to register the vehicle.

11. A tax invoice of Archm Industries Pty Ltd dated 7 December 2016 for supply of a suspension lift kit.

12. A tax invoice of Tempe Tyre & Wheel Centre dated 14 December 2016 for a tyre and wheel package.

13. A tax invoice of TJM Southside dated 14 December 2016 for supply of a brush bar kit and sidesteps.

14. Tax invoices of All Care Tyre & Automotive dated 16 December 2016 and 8 July 2017.

15. An RMS E-Safety registration renewal report by All Care Tyre & Automotive dated 16 December 2016.

16. A series of photographs of the vehicle taken when the vehicle was inspected by the respondent’s expert in October 2017.

17. A series of photographs of the vehicle when it was being displayed for sale by the respondent in December 2016.

18. A report by Mr Fernando Macchia of All Care Tyre & Automotive (undated).

EVIDENCE OF THE APPLICANT

12. The applicant’s evidence was as follows:

1. The applicant resides at a property outside Cooma NSW. The applicant works as an electrician, and also (relevantly during 2016 and 2017) operated a business collecting and selling firewood.

2. The applicant saw the vehicle advertised on the internet. The vehicle was advertised for $32,990.00. The applicant telephoned the respondent to discuss the vehicle and the price. The applicant was told the vehicle was in good condition. The applicant specifically asked whether the vehicle had been previously been used as a mining vehicle. The applicant was told the vehicle was a “fleet company vehicle” but no mention was made of the vehicle having been used as a mining vehicle. The applicant and respondent agreed for the applicant to purchase the vehicle for $35,000.00, with the additional installation of side steps; “bash bars”; a 2 inch suspension lift kit with heavy duty suspension springs; and a tyre and wheel package.

3. The respondent arranged for finance for the vehicle through Esanda Finance.

4. The applicant attended the respondent on 16 December 2016. Documentation relevant to the sale was completed. The applicant drove the vehicle back to his residence.

5. On 17 December 2016 the applicant inspected the vehicle and noticed that the suspension springs had not been replaced, and appeared “corroded”. The applicant telephoned Mr Neich. According to the applicant, Mr Neich informed him that the suspension springs had not been changed, because the mechanic who had inspected the vehicle for the respondent and installed the suspension lift kit (Mr Macchia) had stated that the vehicle had heavy duty suspension springs installed, and it was unnecessary to change the springs. Mr Neich stated that the vehicle was covered by a 3 month or 5,000 klms dealer warranty, and if there were any issues during the warranty period the respondent would repair the vehicle under warranty.

6. On 23 December 2016 the applicant received the tow hitch, and he subsequently arranged for the installation of the tow hitch.

7. On or about 18 February 2017, the applicant had a “tipper” installed on the vehicle by Crowe Engineering & Machining Pty Ltd. A tipper is a mechanical device attached to the structure of the vehicle behind the passenger cab that lifts up and tilts the rear tray of the vehicle so that items can be more easily unloaded from the rear tray. A vice was also welded to the rear tray of the vehicle. Side rails were installed on the vehicle.

8. The applicant stated that the reason he installed a tipper on the vehicle was that he used the vehicle for the collection and sale of firewood. This involved the vehicle being driven in areas off road, including being driven in muddy conditions. The applicant operates a business known as “Brumby Rural and Electrical”.

9. In February 2017 the vehicle had electrical issues with the left side indicators not working and engine warning lights flashing on and off. It was also discovered by the applicant that the electrical wiring in the tray of the vehicle had been cut and was not functioning properly. The applicant contacted the respondent, who agreed to pay for repairs under the dealer warranty. According to the applicant the vehicle was repaired by Alpine Ford in Cooma and “was in and out of the dealership 5 times”.

10. On or about 8 March 2017, the applicant was told by a mechanic at Alpine Ford that there was significant corrosion underneath the vehicle, and that it was suspected the vehicle had been used “in the mines” and exposed to significant salt water.

11. The applicant contacted Mr Neich and emailed Mr Neich a report by Mr Darley of Alpine Ford. In the period between 15 March 2017 and 20 March 2017 there was an email exchange between Mr Neich and the applicant. During the email exchange, the applicant also sent the respondent a report by Rees Automotive Repairs. The applicant asserted that he had been misled and deceived by the respondent because it had not been disclosed that the vehicle had been used in the mines, and exposed to significant salt water causing excessive corrosion. The applicant sought a refund for the price of the vehicle and the paying out of the loan, or an exchange for a suitable vehicle. The applicant asserted that the vehicle was “unrepairable”. The respondent sought that the applicant return the vehicle to Sydney for it to inspect the vehicle, and indicated that, subject to inspection, the respondent would perform any necessary repairs under the dealer warranty.

12. A stalemate then arose between the parties, with the applicant stating he was not prepared to drive the vehicle to Sydney for inspection, and the respondent not prepared to conduct repairs or take any further measures until the vehicle was returned to Sydney for inspection.

13. At the end of April 2017, the applicant instructed Crowe Engineering & Machining Pty Ltd to remove the tipper. The applicant stated that the vice and side rails remain on the vehicle. The applicant also had a “cage” installed over the rear tray, which has also been removed.

14. The applicant stated that he lives on a 2000 acre property outside Cooma. In the period from January 2017 to approximately June 2017 the vehicle was used off road to collect firewood as part of the applicant’s business activities. The applicant stated that there was a 400-500 metre dirt road leading to his house. The vehicle was used driving in paddocks; in muddy and wet areas; and on dirt roads.

15. According to the applicant, at the time of the hearing, the vehicle had travelled approximately 124,000 klms (i.e. approximately 19,000 kms since purchase).

16. In May 2017, the applicant started to work more extensively as an electrician, and reduce the amount of work he was performing collecting firewood.

17. The applicant stated that in August 2017 he purchased a new vehicle and no longer uses the vehicle the subject of this dispute. The applicant stated that he is paying finance on both vehicles.

18. The applicant stated that he had obtained the service records of the vehicle prior to it being purchased by him. The records show the vehicle was owned by “Lease Plan Australia Ltd; Orica Australia Pty Ltd-Orica Mining Services SE”. The applicant stated that the records show the vehicle had many issues, including having the fuel tank replaced and being repaired due to significant mud being caked underneath the vehicle.

19. The applicant submitted that, from such evidence, the Tribunal should infer that the vehicle was used as a “mining vehicle” and such use caused excessive corrosion. The applicant stated that, if the respondent had told him or disclosed to him that the vehicle had been owned by a mining company he would not have purchased the vehicle, because of the risk of excessive corrosion.

REPORTS OF THE APPLICANT

13. The applicant filed and served a number of reports and quotations. Many of the documents do not comply with the NCAT Witness Code of Conduct under Practice Note 3 of the Tribunal. However, any failure to comply with Practice Note 3 goes to the weight of evidence, not its admissibility (Khan v Kang [2014] NSWCATAP 48 at [50]).

13. The reports of the applicant stated as follows:

Mr Galvin and Mr Darley-Alpine Motor Group (Undated)

1. The report states he is the workshop manager. Relevantly, the report states that Mr Galvin has 32 years’ experience as a mechanic, and relevantly states as follows:

“…it is our (sic) opinion that this vehicle has been submerged in salt water or has spent a significant amount of time in the mines. The vehicle has evidence of rust appearing all over the bull bar, metal components, and chassis. Bull bar, manifold, exhaust and general mounting bolts rusted so would be unable to remove. The alloy and plastics are discoloured and deteriorating. The material/mud that is lodged in all crevices under the vehicle is an unknown substance which seems to be causing the corrosion. The electric plugs on the vehicle are also showing signs of corrosion and causing a number of error codes to be present in the vehicle”.

2. The report also refers to an oil leak of the motor and handbrake of the vehicle being inoperative.

3. The report concludes: “In our opinion the condition of the vehicle does not reflect the age of the vehicle.”

Mr Arnold-Summit Smash Repairs (12 April 2017)

1. The report of Mr Arnold is very brief. He relevantly states that the “damage to this vehicle is too extensive to quote: and that “we noticed that the chassis has corrosive damage, electrical boxes in the engine bay have corrosive damage, all metal parts on the under carriage are corroded. Rust on both sill panels and plastics on the engine bay”.

Mr Cornish-Monaro Discount Tyres (13 June 2017)

1. The report of Mr Cornish is also brief. Relevantly, he states: “…the vehicle has been subjected to extreme amounts of water and mud, as the mud is right through the vehicle’s chassis rails, suspension parts etc. which is causing areas in the vehicle to rust and paint starting to lift pit marks in the steel etc…In my professional opinion…this vehicle has been subjected to not just water but contaminated water of some sought over the last four years”.

Mr Tonini-Cooma Crash Repairs (10 April 2017).

1. The report of Mr Tonini is brief and is in the form of a “quote” (which sets out an opinion about the vehicle generally) and an “estimate” which identifies the parts of the vehicle that are damaged.

2. Relevantly, the “quote” states: “…in our honest opinion will need more repairs on this vehicle than what it is worth. The vehicle seems to have been submerged in either salt water or has been in a very corrosive environment possibly in mines. This level of deep pitting and corrosion on the vehicle suggests it has been like this for some time, there is a lot of corrosion in the electrical plugs, on all alloy surfaces and even the plastics have been eaten by a substance and are rapidly deteriorating. There is evidence of water and corrosion under the flooring and under the dash which suggests it has been partly submerged. There is also significant rust in both sills, guards, rear brake, backing plates, gearbox mount, in the floor rails and on the bulbar”.

3. The “quote” also refers to the handbrake; “electrical issues” and the air cleaner. The “quote” concludes: “this vehicle is in a much worse condition than any other Ford vehicle that we have seen and does not reflect the age of the vehicle at all”.

Mr Shane Crowe-Crowe Engineering & Machining Pty Ltd (19 October 2017)

1. Mr Crowe states that he has read the NCAT Expert Witness Code of Conduct and agrees to abide by it. He identifies his qualifications as “Certificate III in Engineering Mechanical (sic)”.

2. Mr Crowe states that he inspected the vehicle on 5 October 2017. The only comment Mr Crowe makes about the tipper he installed on the vehicle is “the tray was modified after the tipper was removed back to original condition”.

3. Mr Crowe states that, in respect of the chassis of the vehicle:

4. The chassis “appears straight” other than small kinks that would cost $300 to repair.

5. There is “little or no rust on visual inspection of the chassis” although “there appears to be rust showing through the paint on the front driver’s side tray mount under the passenger’s door chassis”. Mr Crowe states he is “unable to tell how advanced the rust is”.

6. There is a small to medium dent on the spare tyre cross member, that would cost $300 to repair.

7. There is “pitting…around the tray”, which could be chips from old paint that has been painted over, or rust pitting that has been painted over. Mr Crowe states it “looks like rust” but “we can’t confirm from our visual inspection how advanced the rust is”.

8. The front and cab of the vehicle has “sills on both sides have advanced to rust”, which is likely to have developed “over a period of years” but Mr Crowe could not “prove or confirm how advanced” is the rust.

9. The bull bar has chunks missing which contains rust.

10. There are dents on the side rails and small dents around the cab panels.

11. Mr Crowe concludes: “The overall condition of the vehicle is poor. The structure of the chassis is in some areas poor (as listed) on inspection although the cab and bull bar show evident signs of advanced rust”.

SERVICE RECORDS OF HIGHWAY FORD AND KLOSTER FORD

15. The service records of the vehicle in the period from 20 May 2013 to 28 July 2016 contain the following relevant information:

• When the vehicle was serviced on 16 September 2013 the vehicle had mud “cleaned out from under car as was in all the mounts etc. causing concern” and a “water damaged number plate” was replaced.

• On 4 June 2014 the fuel tank was removed and fuel system cleaned and replaced due to “water contamination in the fuel system”.

• On 20 October 2014 the fuel tank was removed and fuel lines flushed. The cause of the problem is not disclosed in the records.

• On 31 August 2015 at a vehicle inspection “both bull bar park light assemblies” were found to be “corroded”. The mechanic also removed “clay & dirt cake under vehicle as set like concrete”.

• On 27 November 2015 rear suspension springs were replaced.

• On 10 February 2016 the vehicle was towed to the mechanic. The gearbox was stuck in reverse. The service records state: “on inspection found gear lever cable come off and mud set like concrete had to chisel mud out. Refit gear selector cable and tested all OK”.

• On 22 March 2016, the mechanic “cleaned mud caked like concrete” from the “undercarriage”.

• On 27 July 2016 the vehicle was “towed in possible water in fuel”.

16. The service records also refer to other issues with the vehicle that required repair, but such other issues appear to be minor.

EVIDENCE OF MR NEICH

17. Mr Neich stated that he recalled speaking to the applicant over the telephone when the applicant enquired about purchasing the vehicle. He did not recall clearly whether the applicant asked whether or not the vehicle had been a mining vehicle. However, he recalled the applicant asked about who was the previous owner of the vehicle, and he told the applicant it had been owned by “Orica Australia”.

18. Mr Neich stated that the previous owner of the vehicle was listed in the log books of the vehicle.

19. Mr Neich stated that the respondent had purchased the vehicle from Pickles Auctions. According to Mr Neich, the vehicle was in good condition.

20. Mr Neich denied that there were any signs the vehicle had been exposed to water damage, or had excessive corrosion.

21. According to Mr Neich, he and the applicant had agreed to a purchase price of $35,000 that included side steps and front protection bars; a wheel and tyre package; and a 2 inch lift kit with heavy duty springs. Mr Neich stated that the applicant was also informed that the respondent would remove the tray of the vehicle and have it sandblasted and repainted.

22. Prior to the applicant collecting the vehicle, the vehicle was taken to TJM South Side to have the side steps and front protection bars fitted. The vehicle was detailed by an automotive detailer. The vehicle was taken to All Care Tyre and Auto to have the 2 inch lift kit installed; the vehicle serviced; the electrical wiring re-connected after the tray had been removed; and a roadworthy certificate issued. Mr Macchia is the owner of All Care Tyre and Auto and is the regular mechanic used by the respondent.

23. Mr Neich stated that Mr Macchia did not change the springs of the vehicle because the existing springs were better suited to the weight the applicant would be carrying. Mr Neich stated that the respondent was prepared to refund the applicant $500 for the rear springs not used.

24. The applicant flew to Sydney on 16 December 2016. Mr Neich collected the applicant from the airport and drove him to the respondent’s premises. The sale of the vehicle was completed and the applicant drove the vehicle away.

25. According to Mr Neich the applicant telephoned him on 17 December 2016 enquiring about a tow bar. Mr Neich stated that he told the applicant that the vehicle was sold with a trailer brake but no tow bar. However, Mr Neich told the applicant he would send a tow bar. The applicant also asked about the heavy duty springs. According to Mr Neich, he explained to the applicant that the existing springs were suitable, and the applicant was “happy” with Mr Neich’s explanation.

26. Mr Neich stated that he spoke to the applicant in late December 2016 after the tow bar had been sent, and the applicant did not raise any issues with the vehicle.

27. In mid-February 2017, the applicant telephoned Mr Neich complaining of electrical issues with the vehicle. The applicant stated he wanted to take the vehicle to Alpine Ford at Cooma. Mr Neich agreed. Mr Neich subsequently spoke to Mr Darley at Alpine Ford, who said that the electrical issues were due to the vehicle’s electrical wiring harness being unprofessionally cut and needed to be replaced. Mr Neich agreed to pay for this as the vehicle was still under the dealer warranty.

28. A few weeks later Mr Neich spoke to Mr Darley who stated there had been a delay regarding the ordering of parts. During this period, the vehicle was not at Alpine Ford, it was being driven by the applicant.

29. In March 2017 Mr Neich was telephoned by the respondent, who told him that Mr Darley had told the applicant that the vehicle had significant corrosion and was likely to have been submerged in water or a mining vehicle (or both). Mr Neich requested a report and photographs. Mr Neich offered to collect the vehicle for it to be inspected and provide a loan vehicle during the period of inspection. The applicant refused and demanded a refund or replacement of the vehicle. On 15 March 2016 Mr Neich received the report by Mr Darley. There remained an ongoing dispute regarding the respondent having access to the vehicle to have it inspected. According to Mr Neich, the applicant was adamant the respondent should provide a full refund or replacement of the vehicle, and pay for expenses.

30. Proceedings were then commenced in the Tribunal by the applicant. After receipt of the applicant’s documents, Mr Neich had attempted to contact LeasePlan (regarding the vehicle’s history) and Mr Crowe (regarding whether Mr Crowe had saw any structural damage to the vehicle due to corrosion when he installed the tipper, and if so why he had installed the tipper. Mr Neich also argued that the installation of the tipper required an engineering certificate because if affected the chassis/structure of the vehicle. According to Mr Neich, he was informed by LeasePlan that it could not give details regarding the vehicle due to privacy reasons, and Mr Crowe had emailed him stating that, in respect of the tipper, he was not asked by the applicant to conduct any structural inspection of the vehicle.

31. Mr Neich submitted that the service records of Highway Ford and Kloster Ford did not clearly show the vehicle had been exposed to harsh corrosive conditions on mine sites. In respect of corrosion of the vehicle, Mr Neich submitted that such corrosion was more likely due to the manner in which the applicant was using the vehicle, as evidenced by a photograph of the tow bar of the vehicle which showed surface corrosion, despite the tow bar having been supplied after the sale of the vehicle.

32. Mr Neich submitted that the vehicle had been substantially modified by the installation of the tipper, and if the chassis of the vehicle was structurally unsound the tipper should not have been installed. Mr Neich submitted that the vehicle was in a much worse condition than when it was sold due to the use of the vehicle by the applicant, and the modifications that the applicant had performed. Mr Neich pointed out that the report of Mr Crowe did not state whether he had discovered advanced corrosion when he installed the tipper, and if he had discovered advanced corrosion, why he disregarded it and installed the tipper.

EXPERT REPORTS OF THE RESPONDENT

Mr Macchia-All Care Tyre and Automotive (Undated)

33. Mr Macchia’s report is brief (1 page). He states he has read and adopts the NCAT Expert Witness Code of Conduct.

34. Mr Macchia states that he has reviewed the reports of Alpine Motor Group; Rees Automotive Repairs; Cooma Smash Repairs; Summit Smash Repairs; and Monaro District Tyres as well as photographs of the vehicle.

35. Mr Macchia states that when he installed the 2 inch suspension lift kit in December 2016 “I had a detailed view of the underbody of the vehicle. I didn’t notice any rust or damage on the vehicle.”

36. In respect of the photographs supplied of the vehicle taken in March 2017 and April 2017, Mr Macchia asserts that the vehicle is in “an extremely poor condition” with surface and blistering rust present in April 2017 that was not present in March 2017 and “certainly wasn’t there in December 2016”. Mr Macchia asserts that the rust and damage to the vehicle is attributable to the applicant’s use of the vehicle in “extreme conditions” collecting firewood. Mr Macchia sates that the installation of a tipper would add “tremendous stress” on the chassis of the vehicle if the tipper was installed incorrectly.

Mr Savvides-5A Mechanical Repairs (10 October 2017)

37. Mr Saavides states that he has read the NCAT Expert Witness Code of Conduct and agrees to be bound by it.

38. Mr Saavides report is brief. Mr Saavides states that he inspected the vehicle and “current condition of vehicle is poor-excessive underbody damage. Surface rust due from off road use-Possible Crossing streams and driving in muddy condition. Bent/dented suspension components. Dented body parts. Damages are subject to collision with rocks, trees etc.”

39. Mr Saavides states the vehicle is “mechanically good when driven”, but there are “several signs of impact” to the front grill; side steps; the underbody of the vehicle; and roof. There is also damage to the chassis where the tray bolts on and damage to the tray in “several areas”.

40. Mr Saavides states the tow bar has “signs of surface rust”; the “sidesteps have major impact damage and surface rust; and the brush bars have “signs of impact/scrapes and starting to rust where paint has been damaged due to collision.

41. Mr Saavides states: “The rust could have possibly been developed since December 2014 due to improper maintenance and driving style”.

JURISDICTION OF THE TRIBUNAL

42. For the Tribunal to have jurisdiction, the claim must be a “consumer claim” under s 79E of the FTA, being “a claim by a consumer…that arises from a supply of goods or services by a supplier to the consumer (whether under contract or not.)…” There is no issue in these proceedings that the goods were supplied in NSW (s 79K of the FTA); or that the claim is for an amount less than $40,000 (s 79S of the FTA). Under s 79H of the FTA, a person is presumed to be a consumer unless the contrary is proved, and a “consumer” includes a natural person (s 79D of the FTA).

43. The definition of “consumer” within the definition of “consumer claim” has the same meaning as the definition of “consumer” in the ACL (s 79E (1) of the FTA).

44. Under s 3(1)(a) of the ACL, a person is taken to have acquired goods as a consumer if the amount payable for the goods did not exceed $40,000, even if the goods were not of a kind normally acquired for personal, domestic or household use (s 3(1)(b) of the ACL). The definition of consumer also includes “a vehicle or trailer acquired for use principally in the transport of goods or services” (s 3(1) (c) of the ACL).

45. Importantly, under s 3(2) (b) (i) of the ACL a person is not a consumer if the person acquired the goods “in the course of a process of production or manufacture”.

46. In this matter, the applicant acquired the goods predominantly for use in a business operated by him collecting firewood. However, I am not satisfied that collecting firewood is “in the course of production or manufacture”. The applicant was not using the vehicle to produce any tangible item, he was using the vehicle to collect firewood to sell and generate income for himself. In circumstances where both under s 79D of the FTA and s 3(10) of the ACL a person is presumed to be a consumer unless the contrary is proven, I am not satisfied the applicant does not fall within the relevant definition of “consumer”.

47. The Tribunal has jurisdiction in this matter.

APPLICABLE LEGAL PRINCIPLES

48. By reason of ss 28 and 32 of the FTA, the ACL is a law of NSW.

Has the Consumer Guarantee Provision of Section 54 of the ACL Been Breached?

49. Section 54 of the ACL relevantly provides:

54 Guarantee as to acceptable quality

(1)  If:

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

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

there is a guarantee that the goods are of acceptable quality.

(2)  Goods are of acceptable qualityif 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)  If:

(a)  goods supplied to a consumer are not of acceptable quality; and

(b)  the only reason or reasons why they are not of acceptable quality were specifically drawn to the consumer's attention before the consumer agreed to the supply;

the goods are taken to be of acceptable quality.

(5)  If:

(a)  goods are displayed for sale or hire; and

(b)  the goods would not be of acceptable quality if they were supplied to a consumer;

the reason or reasons why they are not of acceptable quality are taken, for the purposes of subsection (4), to have been specifically drawn to a consumer's attention if those reasons were disclosed on a written notice that was displayed with the goods and that was transparent.

(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)  Goods do not fail to be of acceptable quality if:

(a)  the consumer acquiring the goods examines them before the consumer agrees to the supply of the goods; and

(b)  the examination ought reasonably to have revealed that the goods were not of acceptable quality.

50. In respect of s 54 of the ACL, the Tribunal must assess all the relevant facts and circumstances in respect of the statutory criteria under s 54 (3) of the ACL at the date of purchase of the vehicle, to determine whether or not the goods are of acceptable quality under s 54(2) of the ACL. The test is objective (Safi v Heartland Motors Pty Ltd t/as Heartland Chrysler [2016] NSWCATAP 80). No purchase of goods, assessed objectively, is completely risk free (Australian Rong Hua Fu Pty Ltd v Ateco Automotive [2015] VCAT 756). A failure of a consumer to have a vehicle independently inspected prior to purchase is one of the relevant factors to be considered, but from the perspective of what a reasonable consumer full acquainted with the state and condition of the goods would regard as acceptable. The failure to obtain a pre-inspection report does not, of itself, mean the consumer (assessed objectively) cannot establish breach of s 54 of the ACL.

50. In respect of s 54(2) of the ACL, the key issues in this matter are whether the vehicle is “free from defects” and/or “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 s 54(3) of the ACL. Although there are a large amount of inspection reports on the vehicle, I am not satisfied that there is sufficient evidence to for the applicant to establish that the vehicle was not fit for all the purposes for which a vehicle of that kind is commonly supplied under s 54(2)(a) of the ACL; nor that it was not of acceptable appearance and finish under s 54(2)(b) of the ACL; nor that it was not safe under s 54(2)(d) of the ACL.

51. Much of the evidence and submissions in the case focussed upon whether or not the vehicle was a “mining vehicle” prior to sale to the applicant, or damaged by submersion in water prior to sale. However, in respect of s 54 of the ACL, that dispute obscures the key issue. The key issue is whether the vehicle when sold was in a condition that contained inherent defects which caused the vehicle to suffer from excessive rust and corrosion for a vehicle of the same age, price and kilometres travelled, irrespective of how the vehicle was used by the applicant subsequent to purchase.

52. Although the applicant submitted the vehicle was not of acceptable quality due to issues in addition to corrosion, his expert reports focus on the issue of corrosion and that was the issue raised by Mr Darley at Alpine Ford in March 2017. The vehicle travelled approximately 19, 000 klms since purchase, and the only significant issue other than corrosion during this period was the electrical faults in March 2017, which were rectified.

53. The applicant also submits that the service records of the vehicle from Highway Ford and Kloster Ford show that the vehicle had numerous mechanical issues prior to sale. However, when the records are closely analysed, the faults with the vehicle involving the fuel system being flushed and fuel tank changed on 2 occasions are the major issues. Such issues were repaired. There is no evidence in the applicant’s expert reports that such repairs have not been performed adequately, or currently affect the vehicle.

54. When assessing whether the vehicle was reasonably “free from defects” and/or “durable” under s 54 of the ACL, there is evidence that, prior to purchase by the applicant the vehicle was operated by “Orica Australia Pty Ltd-Orica Mining Services SE” and on 2 occasions had been repaired by reason of having a very significant amount of mud caked underneath the vehicle. Importantly, there is evidence from Mr Galvin and Mr Darley at Alpine Ford Cooma; Mr Rees of Rees Automotive Repairs; Mr Tonini of Cooma Crash Repairs; Mr Arnold of Summit Smash Repairs; and Mr Cornish of Monaro Discount Tyres in the period in March and April 2017 that the vehicle had excessive underbody corrosion. On the applicant’s evidence, this is approximately 12 weeks after he started to use the vehicle.

55. The respondent submits that the rust and corrosion on the applicant’s vehicle is caused solely by the applicant’s use of the vehicle. However, even accepting that the applicant used the vehicle between early January 2017 and the middle of March 2017 (when the issue of excessive corrosion was first raised by Mr Darley of Alpine Ford Cooma with the applicant, and subsequently the respondent) for tasks involving heavy off road driving to collect firewood, the relatively short period between the purchase of the vehicle and the corrosion being discovered by Mr Darley) supports the inference that the vehicle had excessive corrosion at the time of sale, which became manifest in March 2017.

56. Although the mechanic who inspected the vehicle in December 2016 (Mr Macchia) may not have discovered the inherent excessive corrosion, and the applicant’s use of the vehicle may have aggravated the inherent excessive corrosion, what must be determined is whether the vehicle was of acceptable quality within the meaning of s 54 of the ACL, including inherent or hidden defects. The reports of the applicant in the period between March and April 2017 referring to excessive corrosion are sufficient to establish that the vehicle was sold in a condition susceptible to excessive underbody corrosion.

57. Under s 54(6) of the ACL, goods do not fail to be of acceptable quality if (a) the consumer causes them to be of unacceptable quality or fails to take reasonable steps to prevent the goods from becoming of unacceptable quality; or (b) damages the goods by abnormal use.

58. I am not satisfied the conduct of the applicant falls within s 54(6) of the ACL. There is no dispute that the vehicle was used off road in harsh conditions. However, the breach of s 54 is that the vehicle was sold in a condition susceptible to advanced underbody corrosion for a vehicle of the same age, kilometres and price, irrespective of its use by the applicant, including use in harsh conditions. Further, from the evidence of the parties regarding negotiations prior to sale (including the installation of the suspension lift kit), I am satisfied that the respondent knew the vehicle was going to be used off road, and by a person who was a farmer.

59. It was not the modification of the vehicle by the applicant (in particular the installation of the tipper) or the use of the vehicle by the applicant that caused it to be of unacceptable quality, it was the vehicle being sold in a condition that made it susceptible to excessive underbody corrosion. Accordingly s 54(6) of the ACL does not apply.

60. However, the modification of the vehicle by the applicant and the manner in which it has been used causing damage to the vehicle is relevant to the issue of what is the appropriate remedy for the breach.

61. I am satisfied the applicant has established the respondent breached s 54 of the ACL. Having established breach of s 54 of the ACL, it is unnecessary to consider whether the vehicle was fit for any disclosed purpose under s 55 of the ACL.

Did the Respondent Breach Section 18 of the ACL?

63. Section 18 of the ACL relevantly states:

18 Misleading or deceptive conduct

(1)  A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

64. There is an extensive number of authorities dealing with the issue of whether conduct is misleading or deceptive, or likely to mislead or deceive. The relevant principles were succinctly summarised by Brereton J in Perpetual Trustee Company Ltd and Anor v Ishak [2012] NSWSC 697 at paras [75]-[76] (although dealing with the former s 42 of the FTA, the relevant principles are applicable to s 18 of the ACL):

Section 42 (like its TPA and ASICA analogues) is not confined to misrepresentations: it is contravened if the acts, omissions, statements and/or silenceof the defendant, taken as a whole and considered in light of all relevant circumstances, are misleading or deceptive or are likely to mislead or deceive [Campbell v Backoffice Investments Pty Ltd [2009] HCA 25 ("Campbell"), [102]; (2009) 238 CLR 304; Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60 ("Butcher"), [104];(2004) 218 CLR 592]. Conduct is misleading if it induces, or is capable of inducing, error [Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191, 198; Rhone-Poulenc Agrochomie SA v UIM Chemical Services Pty Ltd [1986] FCA 218; (1986) 12 FCR 477; Campbell, [25]; Butcher, [111]], and likely to mislead or deceivewhere there is a real (or not remote) chance or possibility that the conduct will have that effect [Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd [1984] FCA 180, [14]; (1984) 2 FCR 82].

Whether conduct has a tendency to lead into error is an objective question of fact, to be determined on the basis of the conduct of the defendant as a whole viewed in the context of all relevant surrounding facts and circumstances [Campbell, [102]; citing Butcher, [109] (McHugh J: where the conduct involves delivery of a document, the effect of the document must be examined in the context of the evidence as a whole, and the court must have regard to all the defendant's conduct in relation to the document, including its preparation and distribution and any statement, action, silence or inaction in connection with it)]. In this exercise, often called "characterization", the subjective impact of the conduct on the plaintiff is irrelevant, the focus being the objective tendency of the conduct to induce an erroneous assumption on the part of a hypothetical individual, but taking into account the respective positions of the parties, including such matters as their knowledge of each other from previous dealings and their respective familiarity with the subject matter [Sutton v AJ Thompson Pty Ltd (In Liq) [1987] FCA 167, [30]; (1987) 73 ALR 233]. The objective nature of this inquiry means that a finding that conduct is misleading or deceptive is not avoided merely because a plaintiff could by proper inquiries have discovered the misleading or deceptive conduct [Butcher, [111]; Henjo Investments Ply Ltd v Collins Marrickville Pty Ltd (No 1) [1988] FCA 40, [40];(1988) 39 FCR 546 (Lockhart J: it is no answer to say that a plaintiff should have made its own inquiries and that, if it had done so, it would have found out the true position)]. However, this does not create by a side wind an obligation of full disclosure in commercial negotiations [Poseidon Ltd v Adelaide Petroleum NL [1991] FCA 663; (1991) 105 ALR 25, 26; Lam v Ausintel Investments Australia Pty Ltd (1990) 97 FLR 458 ("Lam"), 475]. Nor does it mean that a party to commercial negotiations is obliged to volunteer information that will be of assistance to the decision-making of another, or that will avoid the consequences for another (of equal bargaining power and competence) of careless disregard for its own interests [Miller & Associates Insurance Broking v BMW Australia Finance [2010] HCA 31 ("Miller v BMW"), [22]; (2010) 241 CLR 357]. A party that itself independently forms an erroneous impression [Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc [1993] FCA 630;(1992) 38 FCR 1] or leaps to its own erroneous conclusion [Miller v BMW] is not to be regarded as misled, and failure to make reasonable inquiries may be a relevant circumstance in assessing whether a non-disclosure is correctly characterised as misleading [Miller v BMW, [91]].

65. In the context of a sale of a motor vehicle by a dealer, the issue of whether conduct is misleading or deceptive or likely to mislead or deceive must also be considered in the context of the dealer’s obligations under s 62 of the Motor Dealers and Repairers Act 2013, which states as follows:

62 Dealers' notices--disclosure and other requirements

(1) If a provision of this Act requires a "dealer's notice" , the notice provided must:

(a) be in the form prescribed by the regulations for the purposes of the provision that requires the dealer's notice, and

(b) contain the particulars required to complete the form, but not contain particulars that are false or misleading in a material particular.

(2) If this Act requires more than one dealer's notice to be attached or provided in the same circumstances, the required dealers' notices must be combined in one notice.

(3) A holder of a motor dealer's licence is not liable for a contravention of a provision of this Act that requires the attachment to, or provision of a dealer's notice for, a motor vehicle that is sold on behalf of the holder by another motor dealer

66. The applicant submits that the respondent should have (i) disclosed that the vehicle was a “mining vehicle” prior to purchase, either orally or on the Form displayed on the vehicle prior to sale; and (ii) the part of the Form that the vehicle had not been exposed to water damage was false (and accordingly, was misleading or deceptive, or likely to mislead or deceive).

67. In respect of the assertion that the statement on the dealer notice that the vehicle had not been subject to significant damage due to exposure to water, I am not satisfied that the applicant has proved such a representation was misleading or deceptive or likely to mislead or deceive.

68. The key evidence regarding the history of the vehicle is contained in the service records from Highway Ford and Kloster Ford. As discussed previously, those documents show that on 2 occasions the vehicle was repaired in respect of significant mud being on the underside of the vehicle. However, the records do not establish that the vehicle had “significant damage due to exposure to water” that the respondent should reasonably have been aware of and disclosed to the applicant.

69. Further, the Mr Macchia, who installed the suspension lift kit and issued a registration roadworthy certificate did not see any obvious damage due to exposure to water. Mr Crowe, who installed the tipper on the vehicle in February 2017, also does not refer to any obvious damage due to corrosion by water when the tipper was installed. Although the vehicle may have had a latent defect due to its susceptibility to advanced corrosion, I am not satisfied the evidence establishes on the balance of probabilities that the vehicle had “significant damage due to exposure to water at the time of sale of such a nature that respondent should reasonably have known of the damage, and made a disclosure to the applicant.

70. The second aspect of the applicant’s claim of breach of Section 18 of the ACL is that the vehicle was used as a “mining vehicle”. Any representation (including representation by silence in the context of other conduct) needs to be considered at the time of the relevant conduct (i.e. at the time of sale of the vehicle). There was, at the time of sale of the vehicle, no direct evidence that the vehicle was a “mining vehicle” in respect of the specific use of the vehicle in, for example, open cut mines. There is evidence that the vehicle was previously operated by “Orica Australia Pty Ltd-Orica Mining Services SE”. The vehicle could have been used for multiple purposes by that organisation, not necessarily use in open cut mines or mine sites that exposed the vehicle to harsh conditions. In respect of the alleged misleading and deceptive conduct, the relevant conduct is not an omission to state that the vehicle was a “mining vehicle” (because there was no clear evidence about the extent to which it was used in mines, or what type of mine it was used in) but that the vehicle had been previously operated by Orica Australia Pty Ltd-Orica Mining Services.

71. The evidence in respect of the use of the vehicle comes from the service records the applicant has obtained in respect of the vehicle. The applicant did not explain how he obtained such records, or how the respondent in the period prior to sale, should reasonably have known about the previous service history of the vehicle. The records in the applicant’s documents may have been contained in the log books sold with the vehicle or obtained in some other way (the applicant did not explain how the records were obtained).

72. When the respondent purchased the vehicle at auction, it would have presumably known the identity of the seller of the vehicle. Mr Neich did not state in evidence who was the seller of the vehicle when it was purchased at auction by the respondent. However, there was evidence given that the vehicle was sold with log books. It can be inferred that the name of the previous owner would have been identified in the vehicle log books and some form of a service history of the vehicle. Copies of the log books were not in evidence, and it is the applicant who would be in possession of such evidence.

73. If the log books identified that the previous owner was “Lease Plan Australia Ltd” (the lease company) in respect of “Orica Australia Pty Ltd-Orica Mining Services SE” then, even if the respondent should reasonably have disclosed on the dealer form that the vehicle was previously operated by “Orica Mining Services SE”, the applicant has failed to establish such an omission was relied upon and the absence of such information caused him to purchase the vehicle, in circumstances where he had the opportunity to view the log books of the vehicle on 16 December 2017 prior to the completion of the purchase. On his own evidence, the applicant was told over the telephone that the vehicle was a “fleet vehicle”. Accepting the evidence of the applicant that he was told the vehicle was not a “mining vehicle”, he still had the opportunity to inspect the log books of the vehicle when he attended the respondent’s premises on 16 December 2016 prior to completion of the sale, and informing the respondent that he would not purchase the vehicle due to it having been previously operated by “Orica Australia Pty Ltd-Orica Mining Services SE”.

74. Although failure by a consumer to make reasonable enquiries does not mean a supplier of goods is absolved from conduct that is misleading or deceptive or likely to mislead or deceive, it remains a relevant consideration in the context of characterising whether the actual conduct is misleading or deceptive, or likely to mislead or deceive (Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited [2010] HCA 3; (2010) 241 CLR 357 at [91]); and whether there is a sufficient causal nexus between the conduct and any loss suffered (Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592 at [36]-[37]). In all the circumstances of this matter, assessed objectively, the Tribunal is not satisfied the applicant has established on the balance of probabilities that any failure to disclose the previous operator of the vehicle is a breach of s 18 of the ACL.

75. The applicant has failed to establish on the balance of probabilities that the respondent has breached s 18 of the ACL. For the same reasons, the applicant has failed to establish any “false or misleading” conduct of the respondent in breach of s 29 of the ACL.

Has the Respondent Breached s 259 and 260 of the ACL?

76. Sections 259 and 260 of the ACL refer to goods which have a “major failure” and are rejected by a consumer within a reasonable period of time. However, it is unnecessary to discuss those provisions in detail, because under s 262(1)(c) of the ACL, a consumer is not entitled to reject goods if the goods are damaged by the consumer for reasons not related to their state or condition at the time of supply. It is abundantly clear from the evidence that the vehicle has suffered damage by reason of its use by the applicant in the course of operating his business collecting firewood, and even if the vehicle had a major failure at the time of sale by reason of its propensity for rust and corrosion to occur in an advanced manner compared to a similar vehicle of like age and kilometres travelled, the condition of the goods have fundamentally changed and the applicant is not entitled to reject them under s 262 of the ACL.

APPROPRIATE REMEDY

77. For reasons discussed previously, the applicant has established the respondent has breached s 54 of the ACL. The Tribunal is not satisfied on the balance of probabilities the applicant has established any breach of any other relevant provision of the ACL.

78. In respect of remedies available to the Tribunal, it may award remedies under the ACL or under Part 6A of the FTA. Damages may be awarded under s 236 of the ACL. Injunctive orders can be made under s 232 of the ACL, including orders in respect of the repair of the vehicle.

79. The ACL does not operate to limit or restrict the remedial powers of the Tribunal under the FTA or the common law (Lam v Steve Jarvin Motors Ltd [2016] NSWCATAP 186 at [104]-[108]), and the Tribunal has discretion in respect of which remedies it regards as appropriate in the circumstances of the breach.

80. The relevant remedial provisions under the FTA are as follows:

79N Orders in favour of claimant

(cf CC Act 1998, s 8 (1)) In determining a consumer claim wholly or partly in favour of a claimant, the Tribunal may, subject to this Division, make any one or more of the following orders that it considers appropriate:

(a) an order that requires a respondent to pay to the claimant a specified amount of money,

(b) an order that requires a respondent to perform specified work in order to rectify a defect in goods or services to which the claim relates,

(c) an order that requires a respondent to supply to the claimant specified services other than work,

(d) in the case of a claim for relief from payment of money--an order declaring that a specified amount of money is not due or owing by the claimant to a respondent,

(e) an order that requires a respondent to deliver to the claimant goods of a specified description,

(f) an order that requires a respondent to return to the claimant specified goods which are in the possession or under the control of that respondent, whether the property in the goods has passed or not,

(g) an order that requires a respondent to replace goods to which the claim relates,

(h) an order that requires a respondent to refund all or part of the purchase price of specified goods that are in the possession (or under the control) of the claimant and the claimant to return all or part of those goods to the respondent (whether the property in the goods has passed or not).

79U Matters to be considered by Tribunal when making orders

(cf CC Act 1998, s 13)

(1) When making any orders under this Division, the Tribunal must be satisfied that the orders will be fair and equitable to all the parties to the claim.

(2) Without limiting subsection (1), when determining whether or not to make an order under this Division, the Tribunal is to take the following factors into consideration if they are material to the particular circumstances of the case:

(a) whether or not there was any material inequality in bargaining power between the parties to the claim,

(b) whether or not any party to the claim was not reasonably able to protect the party's interest because of the age or physical or mental capacity of that party,

(c) whether or not any person who represented any of the parties to the claim was not reasonably able to protect the interests of the party represented because of the age or physical or mental capacity of that person,

(d) the relative economic circumstances, educational background and literacy of the parties to the claim and of any person who represented any of those parties,

(e) whether or not and when independent legal or other expert advice was obtained by the claimant,

(f) whether any undue influence, unfair pressure or unfair tactic was exerted on or used against the claimant:

(i) by any other party to the claim, or

(ii) by any person acting or appearing or purporting to act on behalf of any other party to the claim, or

(iii) by any person to the knowledge of any other party to the claim or of any person acting or appearing or purporting to act on behalf of any other party to the claim,

(g) the conduct of the parties to the claim in relation to similar transactions to which any of them has been a party,

(h) where the subject of the claim is a contract for the supply of goods or services or a contract collateral to such a contract:

(i) whether or not before or at the time when the contract was made its provisions were the subject of negotiation, and

(ii) whether or not it was reasonably practicable for the claimant to negotiate for the alteration of the contract or to reject any of its provisions, and

(iii) whether or not any provisions of the contract impose conditions that are unreasonably difficult to comply with or not reasonably necessary for the protection of the legitimate interests of any party to the claim, and

(iv) if the contract is wholly or partly in writing, the physical form of the contract and the intelligibility of the language in which it is expressed, and

(v) the extent (if any) to which the provisions of the contract and their legal effect were accurately explained by any person to the claimant and whether or not the claimant understood the provisions and their effect, and

(vi) the commercial or other setting, purpose and effect of the contract.

(3) Without limiting subsection (1), when determining whether or not to make an order or orders under section 79N, 79O or 79P, it is appropriate for the Tribunal to consider (if relevant to the particular circumstances of the case):

(a) any code of practice prescribed under this Act, and

(b) if the Secretary has brought to the attention of the Tribunal any other code of practice (whether or not prescribed by or under any other Act)--that code of practice.

In this matter it is not appropriate to make an order that the vehicle be returned to the respondent and a full refund provided to the applicant. This is the remedy which the applicant sought in the proceedings, and the position of the applicant in respect of his negotiations with the respondent from late March 2017 onwards (or in the alternative replacement of the vehicle).

81. However, irrespective of the vehicle being sold in a condition where it had an undisclosed defect by reason of being susceptible to advanced rust and corrosion in the chassis, floorpan and lower sills of the vehicle, I am satisfied that (i) the applicant conducted significant modifications to the vehicle after purchase (the installation and use for a period of time of the tipper; installation of the ‘cage’ on the rear tray; and installation of a vice on the rear tray) and that the applicant’s use of the vehicle has damaged the vehicle.

82. The photographs of the vehicle; the evidence of the applicant and the evidence of Mr Macchia and Mr Saavides clearly establishes that the vehicle has been driven over rough ground in harsh conditions and driven in wet and muddy condition since purchase. The vehicle has travelled a significant distance since purchase (19,000 klms). The vehicle being driven in such conditions has damage beyond normal wear and tear, and the vehicle has also sustained rust and damage to areas of the vehicle that were installed after purchase (the side steps and tow bar) which have no relationship with the inherent defects in the vehicle when it was sold.

83. Considering the modifications made by the applicant to the vehicle; the use of the vehicle by the applicant subsequent to purchase; and the distance covered by the vehicle, to order a return of the vehicle to the respondent and full refund for the purchase price and finance on the vehicle would not be fair and equitable to both parties, considering the nature of the breach under s 54 of the ACL.

84. The Tribunal is also unable to make an order for damages for the loss of value of the vehicle by reason of its inherent defects. The applicant has provided no evidence as to what is the value of a comparable vehicle in the condition that the vehicle should have been had the respondent not breached s 54 of the ACL. The absence of such evidence means the Tribunal cannot assess damages because no loss has been established (McCrohon v Harith [2010] NSWSC 67 at [118]-[128]).

85. Even if the applicant had established breach of s 18 of the ACL, the Tribunal would not have ordered a return and refund of the vehicle or an award of damages, for the same reasons it does not make such orders in respect of the breach of s 54 of the ACL. There is also insufficient `    evidence to satisfy the Tribunal that it should make an order that the vehicle be exchanged for a replacement vehicle.

86. The only suitable remedy available is an order for repairs. However, an repair order must be crafted to remedy the breach, not to repair items that are separate to the breach. The breach under s 54 of the ACL is that the vehicle was sold with an inherent defect that made it more susceptible to rust and corrosion on the underneath surfaces of the vehicle.

87. Although the applicant has provided many reports about the vehicle, they lack precision about the precise areas of the vehicle that affected by rust. The most specific is the quote of Mr Tonini of Cooma Smash Repairs dated 10 April 2017. However, that quotation refers to items of the vehicle requiring replacement that are not supported by other reports, such as the replacement of suspension springs and replacement of wiring looms.

88. In respect of the dents and chassis rail twisting identified in Mr Crowe’s report, the Tribunal is satisfied that such dents were caused by the applicant’s use and modification of the vehicle after purchase, and are not the subject of any repair order.

89. Doing the best it can on the evidence available, the following order is made to repair the vehicle arising from the breach of s 54 of the ACL:

1. Remove any rust from the floorpan of the vehicle.

2. Remove any rust from the chassis of the vehicle.

3. Remove any rust from the suspension components of the vehicle.

4. Remove any rust from mudguards and lower sills of the vehicle.

5. Replace any bolts or fittings on the floorpan, suspension, and chassis of the vehicle that are significantly rust affected and require replacement.

6. Apply an anti-corrosive/anti-rust treatment to the floorpan, chassis, mudguards, suspension components, and lower sills of the vehicle.

7. Repair and repaint any sections of sills and mudguards that have had rust removed.

90. The above work order does not include the bulbar and towbar of the vehicle. In respect of the bulbar, photographs of the vehicle in respect of its condition after purchase show damage to the bulbar, and the Tribunal is not satisfied that such damage and subsequent use of the vehicle in harsh conditions is not the sole cause of such rust. In respect of the towbar and side steps, they were installed after purchase, so any rust is not caused by the respondent’s breach of s 54 of the ACL.

91. In respect of the performance of the work order, the Tribunal is satisfied that it is fair and equitable that the respondent arrange to collect and return the vehicle to the applicant, rather than the applicant transporting the vehicle to Sydney. It is appropriate that the repairs be completed within 5 weeks of the date of the decision of the Tribunal.

92. The respondent admitted that it had not supplied and installed heavy duty suspension springs, despite promising to do so. It is not a justification that Mr Macchia said it was unnecessary. The Tribunal is satisfied that such conduct is in breach of s 18 of the ACL. There is no evidence regarding the cost of supplying and installing such suspension springs. The only evidence in this regard is Mr Neich offering to refund the applicant $500. Doing the best it can on the available evidence (Howe v Teefy (1927) 27 SR (NSW) 301) the Tribunal awards the applicant $500.

G Sarginson

Senior Member

Civil and Administrative Tribunal of New South Wales

7 May 2018

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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: 07 August 2018