Tasker v Olds
[2017] QCAT 202
•12 June 2017
CITATION: | Tasker v Olds [2017] QCAT 202 |
PARTIES: | Lincoln Tasker |
| v | |
| Jeff Olds (Respondent) | |
APPLICATION NUMBER: | MCDO172-17 |
| MATTER TYPE: | Other minor civil dispute matters |
HEARING DATE: | 4 April 2017 |
HEARD AT: | Southport |
DECISION OF: | Adjudicator Mewing |
DELIVERED ON: | 12 June 2017 |
DELIVERED AT: | Southport |
ORDERS MADE: | 1. Jeff Olds pay to Lincoln Tasker $6,139.51 within 28 days of this Order. 2. Within two business days of receipt of the payment in Order 1, Lincoln Tasker is to return the 2004 Volvo (VIN YV1SZ59G741140458) to Jeff Olds at the place of purchase during business hours, or if Jeff Olds has since relocated his car sales business, to another address nominated by Jeff Olds within 10 km of the place of purchase. |
CATCHWORDS: | MINOR CIVIL DISPUTE – CONSUMER DISPUTE – MOTOR VEHICLE – whether purchaser of motor vehicle able to claim compensation after cooling off period – whether test drive should have revealed defects – whether hidden defects cause car to fail to be of acceptable quality – whether major failure – extent of loss claimable as compensation Competition and Consumer Act (Cth) 2010 Schedule 2 (Australian Consumer Law), s 54, s 259, s 260 Medtel Pty Ltd v Courtney [2003] FCAFC 151 |
APPEARANCES: | |
APPLICANT: | Mr Lincoln Tasker |
RESPONDENT: | Mr Jeff Olds |
REASONS FOR DECISION
Basis of Claim
In January 2016 the Applicant, Mr Tasker, purchased a second hand car from the Respondent, Mr Olds. Mr Olds was a licensed motor dealer at the time of the sale.
The vehicle exhibited mechanical problems immediately after completion of the sale. Despite attempts by qualified mechanics and auto electricians to remedy these problems, the car did not run properly, and, according to Mr Tasker, the car has not been capable of being driven since mid-January 2016.
Mr Tasker seeks a refund from Mr Olds of the purchase price of the vehicle plus on road costs, money he has spent on attempting to repair it and incidental expenses. The total amount Mr Tasker seeks is $6,319.43.
The issue for adjudication by this Tribunal is whether Mr Tasker has a legal right to all or any of the refund and compensation he seeks under Australian law.
Background
On 5 January 2016 Mr Tasker saw an advertisement placed by Mr Olds on the online selling facility Gumtree. According to Mr Tasker, the advertisement was for a 2004 Volvo XC70 with more than 223,000km on the odometer, in “excellent condition” and “free of mechanical defects”. Mr Tasker said it was clear from the ad that the seller was a dealer which, he said, gave him confidence in enquiring further about the car.
Later that day Mr Tasker went to Mr Olds’ car yard to inspect the vehicle. He took it for a test drive and was generally impressed with how it performed. He said it ran well other than a clunk in the steering while on full lock and some stickiness in the automatic transmission when the car changed down to first gear while coming to a stop. Given the price, Mr Tasker said he was prepared to accept the car with these obvious (but to him, not significant) faults, so he completed the necessary paperwork and paid Mr Olds $4,374.00.
When Mr Tasker’s partner attempted to start the vehicle to drive it home from outside Mr Olds’ car yard, it kept stalling and was revving or “hunting” on idle. After a further attempt, the car did eventually start and Mr Tasker’s partner drove the Volvo home while Mr Tasker drove their other car home.
Mr Tasker says his partner reported that on the drive home the car idle hunted and clunked heavily into first gear whenever she stopped at traffic lights. Mr Tasker tried to start the car soon after his partner reached home but it wouldn’t start.
On the morning of 6 January 2016 Mr Tasker returned the Volvo to Mr Olds’ yard and requested his money back. Mr Olds told him he was not entitled to a refund because the cooling-off period ended once he took the car home. Mr Tasker accepted this as he had read something similar on the Department of Fair Trading website the night prior.
Mr Olds suggested the idle hunting may be the result of an electrical fault, and he recommended that Mr Tasker purchase a three year warranty for $695.00 to cover any costs associated with this likely problem. Mr Tasker purchased the warranty.
On 7 January 2016 Mr Tasker took the Volvo to a mechanic recommended by Mr Olds (TRS Auto Repairs (‘TRS’)) who diagnosed the problem as a faulty ignition coil and replaced it for $273.00. The car started well, but on the drive home Mr Tasker says the car continued to idle hunt.
Mr Tasker called TRS who told him to return the car on 13 January. In the meantime, Mr Tasker continued to drive the car and noticed further intermittent problems, including loss of all electrical power, loss of turbo charge, and sluggish acceleration following a heavy clunk in the transmission while highway driving.
On 13 January TRS cleaned out the throttle body in an attempt to rectify the idle hunting problem and booked the car in with an auto electrician on 18 January for further inspection. When he drove away from TRS, Mr Tasker said he noticed the idle hunting had not been fixed.
Mr Tasker said TRS told him he could continue to drive the car, so he embarked on a drive to Noosa on 14 January. He said the car performed terribly on the highway journey, and intermittently clunked and lost electric power. When he pulled over and turned the ignition off, he could not re-start it. He called RACQ for roadside assistance and they could not start the car. The car was then towed to Sterling Auto Electrics in Albion (‘Sterling’).
Sterling conducted tests on the vehicle and identified the following problems:
a)A hole in the vacuum manifold at the base of the engine resulting in an incorrect air to fuel ratio;
b)A fault in the mass air flow meter caused by the previous fault going undetected over time; and
c)A fault in the body control module which affected the electrical components of the car.
Sterling determined that the car was unsafe to drive and quoted Mr Tasker $2,600.00 to rectify the faults.
After another unsuccessful attempt to negotiate a replacement or refund from Mr Olds, Mr Tasker sourced his own mass air flow meter and body control module to minimise his costs, and Sterling installed these. The car performed better, but still would not start without difficulty and several electronic components of the vehicle ceased to work at all. Sterling then uninstalled Mr Tasker’s replacement parts and reinstalled the original parts.
Mr Tasker asserts that Mr Olds has failed to comply with consumer guarantees under Australian law because he sold a vehicle that did not operate as expected. Accordingly, he seeks compensation from Mr Olds totalling $6,319.43, comprising:
a)The purchase price of the car: $4,200.00
b)Stamp duty: $ 147.00
c)Transfer fee: $ 27.00
d)Warranty: $ 695.00
e)Cost of mechanical work: $ 911.71
f)Cost of parts: $ 179.72
g)Towing: $ 159.00
Relevant Legislation
Motor Dealers and Chattel Auctioneers Act (Qld) 2014
The sale of cars by a licensed motor dealer is subject to the provisions of the Motor Dealers and Chattel Auctioneers Act 2014 (Qld) (‘MDCA Act’). The MDCA Act provides protections for purchasers of certain motor vehicles, including a statutory warranty and cooling off period, and the availability (or not) or each is clearly noted on the prescribed Form 12 that must be completed by the dealer and signed by the purchaser.
Schedule 1 of the MDCA Act provides purchasers with a statutory warranty of three months for used motor vehicles that have travelled less than 160,000km and are less than 10 years old. Mr Tasker acknowledged in signing the Form 12 at the time of purchase and at the hearing that a statutory warranty was not available to his purchase of the Volvo given its mileage and age.
Section 99 of the MDCA Act provides for a cooling-off period that starts on the day a dealer and purchaser enter into a legally enforceable sale agreement and ends at 5.00pm on the next business day. However, the cooling off period will end earlier if the purchaser takes possession of the vehicle other than for an inspection or test drive.[1] Again, Mr Tasker acknowledged by signing the Form 12 and during the hearing that when his partner drove the car from outside Mr Olds’ yard on 5 January 2016 he was taking it home after a test drive, so the cooling-off period terminated at that point.
[1]Motor Dealers and Chattel Auctioneers Act 2014 (Qld), s 99(2)(c).
Australian Consumer Law
Nevertheless, the Australian Consumer Law[2] (‘ACL’) provides purchasers of cars with guarantees in addition to any provided by the MDCA Act in certain circumstances. Specifically, where a person buys a car for normal household use from a dealer who supplies cars as part of a business enterprise, the purchaser is a ‘consumer’[3] and the dealer is a ‘supplier’ and the supply of the car is subject to the consumer guarantee provisions in Part 3-2 of the ACL.
[2]Competition and Consumer Act 2010 (Cth), Schedule 2.
[3]Australian Consumer Law 2010, s 3.
Mr Tasker’s claim for a refund and compensation is based on his assertion that the Volvo is defective. This claim falls within s 54 of the ACL, which relevantly provides:
(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 quality if they are as:
(a)fit for all the purposes for which goods of that kind are commonly supplied; and
(b)acceptable in appearance or 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 by 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.
Section 54(7) further provides that goods do not fail to be of acceptable quality if the consumer examined them before purchase, and that examination ought reasonably to have revealed any defects or other problems.
Was the car of acceptable quality?
That Mr Tasker’s Volvo suffers from substantial problems is not in dispute. Mr Olds does not contest the findings in the report Mr Tasker obtained from Sterling. Mr Olds opposes the claim because he says Mr Tasker had an opportunity to test drive the car, did so, found it to be suitable for his needs, paid for it and drove it away. Mr Olds says he could not have known the extent of latent defects Mr Tasker would find after purchase.
Section 54(2) of the ACL states that goods are of acceptable quality if they are as free from defects (etc.) as a reasonable consumer fully acquainted with the state and condition of the goods (including hidden defects) would regard as acceptable having regard to the price, among other things. This is an objective test, and requires this Tribunal to consider what the typical “reasonable person” who purchased a 2004 Volvo for $4,200.00 with 232,000km on the odometer would regard as acceptable quality.
This test was discussed in Medtel Pty Ltd v Courtney[4] with reference to s 74D of the Trade Practices Act (Cth) 1974 (the predecessor to the ACL), in which His Honour Branson J said the test:
“…calls for the quality, or fitness for purpose, of the goods to be measured against what is reasonable to expect in that regard at the time of supply of the goods to the consumer. That measurement must be undertaken, in my view, in light of information concerning the goods available at the time of trial. However, the issue remains whether the goods were as fit for the relevant purpose as it was reasonable to expect at the time of their supply to the consumer.”[5]
[4][2003] FCAFC 151.
[5]Ibid, [70] (Branson J).
In Prestige Auto Traders Australia Pty Ltd v Bonnefin[6] the NSW Supreme Court agreed with Branson J’s view that the guarantee as to acceptable quality is available to a reasonable consumer who trialled or tested goods prior to purchase and seemed acceptable in quality at that time.[7] The corollary is that, where the goods are soon after found to be defective and those defects would have been present during the trial, the consumer can still assert that the guarantee has not been complied with.
[6][2017] NSWSC 149.
[7]Ibid, [132] and [133] (Adams J).
Mr Tasker heard a clunk in the steering while on full lock and noticed some stickiness in the automatic transmission while test driving the car. He noticed some wear on the interior trim and a small dent on one panel. He knew the car had travelled in excess of 232,000km. The Gumtree ad stated that it was free from mechanical defects. He had confidence buying from a dealer. He thought $4,200.00 was a reasonable price in the circumstances.
I am satisfied that the remainder of the car’s problems became obvious after the test drive, but existed at the time the car was supplied to him. In particular—and based on the uncontested report by Sterling dated 23 May 2016—I find that the idle hunting was caused by a hole in the vacuum manifold, resulting in a faulty mass air flow meter. I also find that the intermittent electrical component failures and sluggish acceleration were likely caused by a faulty body control module. Sterling’s analysis of the car and diagnosis of these defects was conducted at some stage prior to 29 April 2016,[8] but I accept that the car had not been driven since 14 January 2016 so these diagnosed defects existed as at that date. Given the symptoms of these defects became obvious (albeit intermittent) from the moment Mr Tasker’s partner took the car from Mr Olds’ yard, I find that the car was not free from defects at the time of supply and Mr Olds has therefore failed to comply with the guarantee as to acceptable quality in s 54(2)(c).
[8]Evidenced by invoice 25800 from Sterling dated 29 April 2016.
For completeness I note that s 54(7) does not relieve Mr Olds from the breach of s 54(2)(c) because, while Mr Tasker did test drive and inspect the car before purchase, that examination could not have revealed the hidden defects that he ultimately discovered. I am drawn to this finding for two reasons: First, the defects only became obvious on long highway drives (in the case of the idle-hunting, electrical failures and acceleration problems), or after the car was re-started; second—and perhaps most compellingly—TRS had the car on two occasions and their invoices of 7 and 13 January 2016 claim that they conducted computer scans and performed various work and despite that these defects were not obvious to them.
Remedy
Section 259 of the ACL provides that a consumer may take action against a supplier of goods if a consumer guarantee has not been complied with. As I have found that the guarantee in s 54(2)(c) has not been complied with, Mr Tasker is entitled to a remedy which is dependent on whether the failure to comply falls under s 259(2) or (3).
Section 259(2) and (3) provide:
(2)If the failure to comply with the guarantee can be remedied and is not a major failure:
(a)The consumer may require the suppler to remedy the failure within a reasonable time; or
(b)If such a requirement is made of the supplier but the supplier fails or refuses to comply with the requirement, or fails to comply with the requirement within a reasonable time—the consumer may:
(i) Otherwise have the failure remedied and, by action against the supplier, recover all reasonable costs incurred by the consumer in having the failure so remedied; or
(ii) Subject to section 262, notify the supplier that the consumer rejects the goods and the ground or grounds for the rejection.
(3)If the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may:
(a)Subject to section 262, notify the supplier that the consumer rejects the goods and the grounds for the rejection; or
(b)By action against the supplier, recover compensation for any reduction in value of the goods below the price paid or payable by the consumer for the goods.
The more appropriate remedy of s 259(2) or (3) turns on whether or not the failure to comply with a consumer guarantee is a ‘major’ failure. To the extent relevant to this claim, s 260 provides that a failure to comply with a consumer guarantee is a ‘major failure’ if:
(a)The goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or
(b)…
(c)The goods are substantially unfit for a purpose which goods of the same kind are commonly supplied and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or
(d)…
(e)The goods are not of acceptable quality because they are unsafe.
Mr Tasker said the Gumtree ad for the Volvo described it has having no mechanical defects. He says he would not have agreed to purchase the Volvo if he’d known the extent of the defects. This seems obvious and reasonable and a finding of major failure pursuant to s 260(a) is open on the facts.
There is also evidence from Sterling that the car is unsafe consistent with s 260(e), although I am not inclined to pursue this line as the report containing this statement does not elaborate on how the defects make the car unsafe.
Most persuasive is the fact that Mr Tasker’s Volvo is substantially unfit for purpose. He unsuccessfully asked Mr Olds on at least two occasions to repair it. He attempted to have it repaired at his own expense on at least three occasions. It was determined by 29 April 2016 that the car could not easily or economically be fixed to make it driveable and therefore fit for purpose. It is clear to me that the failure to comply with the consumer guarantee as to acceptable quality due to defects is a major failure under s 260(c).
Given this finding, Mr Tasker is entitled to reject the goods and I find that he did so as early as 6 January 2016 when he returned the car to Mr Olds and requested a refund. Mr Olds did not consider that he had any obligation to accede to Mr Tasker’s request given the provisions of the MDCA Act, but it appears he was not aware of his obligations and potential liability under the ACL.
The consequence is that Mr Tasker is entitled not only to a refund of the $4,374.00 he paid to Mr Olds on 5 January, but also for any reasonably foreseeable loss he suffered as a result of the failure to comply with s 54(2)(c) ACL.[9] In this regard Mr Tasker claims the cost of the after-sale warranty sold by Mr Olds ($695.00), the cost of repairs by TRS and Sterling not already covered by the warranty ($911.71), parts purchased by Mr Tasker ($179.92) and towing ($159.00).
[9]ACL, s 259(4).
With the exception of the claim for parts at $179.92, I find that all amounts claimed were reasonably foreseeable and therefore claimable from Mr Olds by Mr Tasker. I exclude the parts because Mr Tasker sourced and purchased those and he has them in his possession. He could on-sell those and recoup his expense.
Orders
Accordingly, I make the following orders:
(1)Jeff Olds pay to Lincoln Tasker $6,139.51 within 28 days of this Order.
(2)Within two business days of receipt of the payment in Order 1, Lincoln Tasker is to return the 2004 Volvo (VIN YV1SZ59G741140458) to Jeff Olds at the place of purchase during business hours, or if Jeff Olds has since relocated his car sales business, to another address within 10 km of the place of purchase.
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