Ryan Connor v Teela Enterprises Pty Limited and Robyn May Stevenson t/as Sureflo Exhaust

[2014] NSWCATCD 93

NSW Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:	Ryan Connor v Teela Enterprises Pty Limited and Robyn May Stevenson t/as Sureflo Exhaust [2014] NSWCATCD 93
Hearing dates:	5 May 2014
Decision date:	03 June 2014
Before:	G J Sarginson, General Member
Decision:	The application is dismissed.
Catchwords:	Motor vehicle modifications, Acceptable quality
Legislation Cited:	Australian Consumer Law 2010 Fair Trading Act 1987 Consumer Claims Act 1998 Civil and Administrative Tribunal Act 2013
Cases Cited:	Low v Mack Trucks Australia Pty Ltd HYPERLINK " \o "View Case" [2008] FCA 439 Merck Sharpe & Dohme (Australia) Pty Ltd v Peterson HYPERLINK " \o "View Case" [2011] FCAFC 128)
Category:	Principal judgment
Parties:	Ryan Connor (applicant) Teela Enterprises Pty Limited and Robyn May Stevenson t/as Sureflo Exhaust (respondent)
File Number(s):	GEN 14/05278

reasons for decision

BACKGROUND

1. The application in this matter was filed on 29 January 2014. The applicant seeks an order for a full refund of an aftermarket exhaust system he purchased from the respondent on 24 November 2012 for his VE (Series 2) SS Commodore utility. The cost of the exhaust system was $1,500.00. The exhaust system was purchased from, and installed by, the respondent. The applicant also seeks compensation for a repair fee of $50.00 he incurred in respect of the vehicle, and an order that the respondent supply him with "an original, undamaged and unaltered brace".

1. The proceedings were listed before the Tribunal on 17 March 2014, when orders were made that the parties file and serve evidence, and the matter listed for hearing on 5 May 2014.

1. The Tribunal had caused a business name search with NSW Fair Trading to be performed on Sureflo Exhausts. That search revealed the correct legal entity is Teela Enterprises Pty Limited and Robyn May Stevenson t/as Sureflo Exhausts. Accordingly, the name of the respondent is amended to reflect its correct legal entity.

1. On 5 May 2014, the Tribunal, in accordance with its statutory obligations, explored conciliation with the parties. The matter was unable to be resolved, and proceeded to hearing.

1. The applicant and Mr Greg Stevenson, the manager of the respondent, gave sworn evidence. Each party cross examined the other party and made submissions. Each party relied on documents which had been filed and served.

JURISDICTION

1. The dispute involves a claim by a consumer arising from a contract to provide services, and proceedings were filed within 3 years of the date of the cause of action. Accordingly, pursuant to Sections 3; 3A; and 7 of the Consumer Claims Act 1998, the Tribunal has jurisdiction.

APPLICANT'S EVIDENCE

1. The applicant's documentary evidence can be summarised as follows:

a)   A tax invoice from the respondent dated 24 November 2012;

b)   A tax invoice from Rapid Exhaust Systems Pty Limited dated 23 December 2013 for "repair muffler as required left hand side" in the sum of $50.00;

c)   Email by applicant to respondent dated 23 December 2013;

d)   Various emails between applicant and Mr Greg Stevenson between 27 December 2013 and 6 January 2014;

e)   Letters by NSW Fair Trading dated 17 January 2014 and a further undated letter;

f)   Various extracts from the 'Australian LSI & Holden Forums' website/forum containing posts by the applicant and Mr Stevenson, and other posts about vehicles similar to the applicant's vehicle;

g)   An email from the applicant to Roads and Maritime Services dated 20 January 2014 and a response from Mr Mark McIntyre, Team Leader Technical Enquiries & Audits Safety and Compliance Accreditation dated 21 January 2014;

h)   Various photographs of the muffler system.

1. The applicant gave oral evidence. He stated that he relied on a representation from the respondent prior to purchasing the muffler system that it was "completely legal". He stated that in December 2013 (over 1 year after the purchase and installation of the aftermarket exhaust system) he noticed a noise when driving over bumps from the left rear of the vehicle. He inspected the vehicle that evening and saw that the exhaust had "dropped" on the left side. He took the vehicle to Rapid Exhaust Systems Pty Limited who put the car up on a hoist. The applicant was informed that the left rear "hangar" (i.e. a rod at the rear of the vehicle attaching the muffler to the vehicle) was missing or broken. The applicant stated that the inspection also revealed that there was an aftermarket "brace" (which he referred to a "chassis brace") being a metal piece consisting of 3 parts welded together in a "U" shape, which was a replacement for the Holden factory "chassis brace". Rapid Exhaust Systems Pty Limited performed a "temporary repair" of the rear left hangar.

1. The applicant subsequently corresponded with the respondent, raising the issue of the missing left rear hangar, and the "chassis brace". He asserted that the exhaust system was not of acceptable quality, and sought a refund. The applicant complained that the "chassis brace" could render the vehicle liable for a defect notice from Roads and Maritime Services, and that there was no way to use the original factory brace without "squashing" the exhaust pipes, which would reduce performance. The applicant also complained about the "alignment" of the exhaust. Mr Stevenson offered, in an email of 6 January 2014, to "inspect the system and replace or repair as deemed necessary, once we see the system". The respondent also offered to repair the rear hangar, and refund the applicant the $50.00 he paid Rapid Exhaust Systems Pty Limited.

1. The applicant stated he did not want the exhaust system repaired, and "had I known that my vehicle's bracket would be modified without my approval I would not of (sic) approved".

1. The applicant's email to Roads and Maritime Services dated 20 January 2014 relevantly stated:

"...one of the chassis braces across the driveshaft tunnel has been modified. The brace has been modified by cutting it and welding in new pieces of flat bar (shown circled in red in the attached photo) in order to step around the way they routed the exhaust pipework.

I am concerned that this is potentially something that could render the car defective. Can you please advise me whether the modification to this brace (as shown in the picture) is acceptable without certification by an engineer".

1. The email attached a single photo of the underneath of the vehicle.

1. Mr McIntyre from Roads and Maritime Services responded:

"This would require VSCCS certification, a defect notice could be issued if the vehicle is not certified".

1. The applicant stated that he had removed the aftermarket exhaust from the vehicle, and had replaced it with the original factory exhaust. The applicant stated that a reason he did not want the respondent to perform any repairs on the exhaust was that the vehicle was now being driven by his brother who resides in Albury, and it would be inconvenient for the vehicle to be returned to Sydney for inspection and repairs.

RESPONDENT'S EVIDENCE

1. The respondent's documentary evidence was as follows:

a)   Extracts from the Australian LSI & Holden Forums' website/forum containing posts by the applicant and Mr Stevenson;

b)   A report of Mr Greg South, Automotive Engineer and Mechanic of G Force Automotive dated 5 March 2014;

c)   A copy of information from the Roads and Maritime Services website regarding certification of modified vehicles and the Vehicle Safety Compliance Certification Scheme;

d)   An extract from the NSW Government Gazette No 151 dated 8 November 2013 regarding "Light vehicle modifications requiring certification";

e)   A copy of Roads and Maritime Services Vehicle Safety Compliance Certification Scheme Bulletin 1 Rev 81 dated 24 February 2014, stating that Mr Gregory South of G Force Automotive is a licenced certifier of body and chassis modifications under the VSCCS scheme;

f)   Various photographs.

1. The report of Mr South does not contain a CV, nor an acknowledgement he ascribes to the NCAT Code of Conduct in respect of expert witnesses, but states that he is an "Automotive Engineer and Mechanic" who is a member of the MTA and IAME. Mr South inspected and performed compression tests and axial strength tests on the type of "brace plate" which, according to Mr Stevenson, was used in the installation of the exhaust. Mr South asserted that the "brace plate" was structurally sound, and it was unnecessary to obtain an engineer's certificate in respect of the "brace plate" under the VSCCS scheme, provided the plate was fitted correctly and ground clearance was maintained.

1. Mr Stevenson asserted that the problem with the left rear hangar on the vehicle was "minor", and occurred due to a change in positioning of the hangar by Holden in the change between the VE model and VE Series 2 model.

1. In respect of the "chassis brace", Mr Stevenson asserted that the reference to the plate as being a "chassis brace" was incorrect, and that the plate was a "brace plate". According to Mr Stevenson, the plate did not attach to the chassis of the vehicle, and was not part of the structural integrity of the vehicle. Rather, he asserted that plate simply attached to the same position on the underbody of the vehicle as the standard Holden plate, but the reason the respondent used a modified plate was so that the wider exhaust pipes had adequate clearance underneath the floor pan of the vehicle. Mr Stevenson submitted that the email of Mr McIntyre of Roads and Maritime Services should not be given any weight, because the applicant had informed Mr McIntyre the plate was a "chassis brace" rather than a "brace plate".

1. Mr Stevenson stated that, at all times he has been prepared to inspect and conduct any necessary repairs to the applicant's vehicle, despite the warranty on the exhaust system having expired (the exhaust system having a 12 month warranty). He reiterated under oath that he was prepared to inspect and repair the vehicle, and would install the original "brace plate" if that is what the applicant wanted.

1. The applicant objected to the report of Mr South being admitted in evidence, as he had not attached his qualifications and had not stated that he had referred to and adopted the NCAT Code of Conduct in respect of expert witnesses. However, in circumstances where the quantum of the dispute was small; the respondent was likely to seek an adjournment should the report of Mr South not be admitted as evidence so that Mr South could adopt the Code of Conduct; the applicant was not prejudiced in that he was able to make submissions as to the weight (if any) the Tribunal should give the report; and the overriding obligation of the Tribunal to facilitate the just, quick and cheap resolution of the real issues in the proceedings (Section 36 of the Civil and Administrative Tribunal Act 2013), the Tribunal exercised its discretion to admit the report of Mr South.

RELEVANT LEGAL PRINCIPLES

1. Section 54(1) of the Australian Consumer Law 2010 ("the ACL", which became a law in NSW by reason of the operation of Section 28 of the Fair Trading Act 1987, and came into effect on 1 January 2011) states, relevantly, that if goods are supplied to a consumer in trade and commerce (and the sale is not by way of auction) "there is a guarantee that the goods are of acceptable quality".

1. Section 54 of the ACL further provides:

(2) Goods are of acceptable quality if they are:

(a) fit for the purpose for which the 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).

1. Section 54(3) of the ACL states that matters to be taken into account in respect of whether or not goods are acceptable quality are, relevantly, whether the goods are fit for the purposes for which goods of that kind are commonly suppled (Section 54(3)(a) of the ACL); the price of the goods (Section 54(3)(b)) and any relevant representations or statements about the goods by the supplier or manufacturer (Section 54(3)(c) and (d) of the ACL.

1. A similar statutory provision is contained in Section 19 of the Sale of Goods Act 1923 (NSW) that goods, in respect of this type of matter, must be "reasonably fit for the purpose" if the buyer expressly or impliedly makes known to the seller the purpose for which the goods are purchased.

1. Goods are of acceptable quality if they are fit for the purpose or purposes for which they goods are of that kind are commonly bought as it is reasonable to expect having regard to any description applied to them; the price; and other relevant circumstances (Low v Mack Trucks Australia Pty Ltd[2008] FCA 439 at [31]; Merck Sharpe & Dohme (Australia) Pty Ltd v Peterson[2011] FCAFC 128). The fact that a consumer is not satisfied with goods is not determinative of whether or not the goods were of acceptable quality. In respect of what constitutes "acceptable quality" or "merchantable quality", a consumer generally has no right to expect a "perfect article" (David Jones v Willis[1934] HCA 47; (1934) 52 CLR 110; Alpine Beef Pty Ltd v Trycill Pty Ltd(2010) FCA 136 at [58]).The test is from the perspective of a reasonable consumer placed in the position of the actual consumer, rather than the consumer's subjective belief. In respect of what is "merchantable quality" Dixon J in Australian Knitting Mills v Grant[1933] HCA 35; (1933) 50 CLR 387 at 418 stated:

"The condition that goods are of merchantable quality requires that they should be in such an actual state that a buyer fully acquainted with the facts and, knowing what hidden defects exist and not being limited to their apparent condition would buy them without abatement of the price obtainable for such goods if in reasonably sound order and condition and without special terms."

1. If the applicant proves breach of Section 54 of the ACL, the Tribunal must make orders which are "fair and equitable to all parties of the claim" pursuant to Section 13(1) of the Consumer Claims Act 1998. Further, before any compensation by way of damages can be awarded, the Tribunal must be satisfied the applicant has taken all reasonable measures to mitigate loss (British Westinghouse Electric and Manufacturing Company Limited v Underground Electric Railways Company of London Limited [1912] AC 673). The respondent has the onus of proving the applicant failed to act reasonably to mitigate loss. In BM & JA Holdings Pty Ltd v Clarence Street Developments Pty Ltd [2012] NSWSC 1236, Associate Justice Macready summarised the principle of failure to mitigate as follows (at para [12]):

"The principle is that the plaintiff cannot recover as damages any loss which it would not have suffered had it acted as a reasonable man following the breach. Although conceptually distinct from the measure of loss, mitigation is one of the elements in measuring the plaintiff's loss...The ultimate burden of proving its loss lies upon the plaintiff, but the defendant bears the burden of calling evidence establishing that the plaintiff acted unreasonably."

APPLICATION OF LEGAL PRINCIPLES TO FACTS

1. The applicant's complaints about the quality of the muffler system relate essentially to two issues. The first is the missing or damaged rear hangar which caused the exhaust system to "drop" on the left side. The second issue is the aftermarket "chassis plate" or "brace plate" underneath the exhaust system.

1. In respect of the rear hangar, the Tribunal is not satisfied the applicant has proved on the balance of probabilities that the respondent has breached Section 54 of the ACL. The applicant had used the vehicle for approximately 12 months before the left side of the exhaust system "dropped". The applicant did not serve any expert report indicating why the left side of the muffler system dropped. The invoice of Rapid Exhaust Systems Pty Limited dated 23 December 2013 does not indicate why the exhaust system "dropped" and it is notable that the repair of the system only cost the applicant $50.00. Even if the repair was "temporary" as the applicant alleges, such a repair was clearly minor. If the cause of the muffler system was, as the applicant alleges in an email to the respondent dated 28 December 2013, the factory "hangars" being cut off and "a new one not welded on", then it is difficult to understand how the system was able to perform without problem for approximately 12 months before the exhaust "dropped".

1. Further, even if the Tribunal accepted that the applicant had proved on the balance of probabilities the respondent was in breach of Section 54 of the ACL in respect of the left rear hangar, the Tribunal is satisfied the respondent has proved the applicant has failed to take all reasonable measures to mitigate his loss by refusing to return the vehicle so that the respondent could perform repairs, as evidenced by Mr Stevenson's offer to the applicant in the emails between the parties, and Mr Stevenson's sworn evidence to the Tribunal. Had the applicant proved breach of Section 54 of the ACL, the Tribunal is not satisfied that the applicant has proved it would be "fair and equitable to both parties" to order the remedy of returning the exhaust and obtaining a full refund in any event, and notes that the applicant does not want the vehicle repaired, as he subjectively believes it is not capable of being repaired and it is inconvenient to him to have the vehicle repaired as is now located in Albury being driven by his brother.

1. The issue of the "chassis plate" or "brace plate" is more complex. The key issue is whether or not the plate renders the vehicle liable to a defect notice from Roads and Maritime Services on the basis of the modification of the vehicle. The Tribunal accepts that a reasonable consumer would not purchase an aftermarket exhaust system if it made the vehicle liable to be given a defect notice from Roads and Maritime Services.

1. It is clear from the evidence that the installation of the plate did not involve further holes being drilled into the underbody of the vehicle, but a different plate (in a 'U' shape, consisting of 3 welded pieces) being installed. Ultimately, the evidence of the applicant regarding whether or not the plate is liable to attract a defect notice consists of his email to Roads and Maritime Services (with a single attached photo) and the response. In light of the opinion of Mr South and the evidence of Mr Stevenson, the Tribunal is not satisfied the applicant has proved to the requisite standard that the plate is such that it renders the vehicle liable to attract a defect notice from Roads and Maritime Services, in the absence of any expert report submitted by the applicant. The Tribunal is not satisfied that Mr McIntyre's email can be given significant weight when the applicant has referred to a "chassis brace" and has only provided a single photograph as an attachment to the email. Accordingly, the Tribunal is not satisfied the applicant has proved on the balance of probabilities that the respondent has breached Section 54 of the ACL in respect of the plate.

1. Even if the applicant had proved that the respondent had breached Section 54 of the ACL in respect of the plate, the Tribunal would also not be satisfied the applicant had taken all reasonable measures to mitigate his loss. The applicant has, since the dispute arose, steadfastly refused to take the vehicle to the respondent for inspection and repair, and has demanded a refund. The Tribunal is not satisfied that the vehicle is not capable of being repaired or any issue with the plate rectified (if there is an issue), and the respondent has not been given an opportunity to do this.

CONCLUSION

1. For the above reasons, the Tribunal is not satisfied to the requisite standard of proof the respondent is in breach of its obligations under the relevant provisions of the Australian Consumer Law 2010, and accordingly the proceedings are dismissed.

G J Sarginson

General Member

Civil and Administrative Tribunal of New South Wales

3 June 2014

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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