Vallender v Peter Warren Automotive Pty Ltd T/As Mercedes Benz Macarthur

[2024] NSWCATCD 60

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Vallender v Peter Warren Automotive Pty Ltd T/AS Mercedes Benz Macarthur [2024] NSWCATCD 60

Hearing dates:

26 June 2024

Date of orders:

04 October 2024

Decision date:

04 October 2024

Jurisdiction:

Consumer and Commercial Division

Before:

H. Woods, Senior Member

Decision:

(1) Application dismissed

Catchwords:

CONSUMER LAW — Consumer guarantees — Action against supplier— Action against manufacturer

CONSUMER LAW — Consumer guarantees — Supply of goods — Guarantee as to acceptable quality.

Legislation Cited:

Australian Consumer Law (NSW)

Fair Trading Act 1987 (NSW)

Cases Cited:

Alliance Motor Auctions Ltd v Saman [2018] NSWCATAP 137

Edwards v Caravan v RV Central Pty ltd [2022] NSWCATD

Safi v Heartland Motors Pty ltd t/as Heartland Chrysler [20167] NSWCATAP 80

Vautin v By Winddown (No 4) [2018] FCA 426; (2018) 362 ALR 702

Volkswagen Group Australia Pty Ltd v Saad [2022] NSWCATAP 133

Category:

Principal judgment

Parties:

Mark Vallender (Applicant)
Peter Warren Automotive Pty Ltd T/ As Mercedes-Benz Macarthur (First Respondent)
Mercedes- Benz Australia Pacific Pty Ltd (Second Respondent)

Representation:

Counsel:
H Pararajasingham (Applicant)

First respondent (Self represented – Mr Perrin, in house counsel)
Second respondent (Self represented - Mr Appleton)

File Number(s):

2023/00388626

Publication restriction:

Nil

REASONS FOR DECISION

INTRODUCTION

1. The dispute relates to a new Mercedes Benz GLS 400d motor vehicle with New South Wales registration “LOCHY” (the Vehicle), which the applicant purchased on about 13 December 2021 from the first respondent, Peter Warren Automotive Pty Ltd, trading as Mercedes-Benz Macarthur.

2. The second respondent, Mercedes-Benz Australia / Pacific Pty Ltd was the importer of the Vehicle and the manufacturer for the purposes of the Australian Consumer Law (“ACL”).

3. The application was filed on 28 June 2023 seeking a refund of the purchase price of the Vehicle.

4. Although the relief of a refund cannot be ordered against the second respondent, at its request, it remained a respondent.

REPRESENTATION AND IDENTIFICATION OF THE EVIDENCE AND SUBMISSIONS RELIED ON BY THE PARTIES

5. Mr Pararajasingham appeared for the applicant. Mr Perrin, in-house counsel, appeared for the first respondent. Mr Christopher Appleton, an employee of the second respondent, appeared for the second respondent.

6. In opening, the applicant said that the vehicle suffers from a defect and that the (high beam) dipping feature fails to dip and that a fault message permanently affixes to the dashboard of the Vehicle and therefore the vehicle was not of acceptable quality and that there was a major failure in respect to the intelligent lighting system in the Vehicle.

7. The respondents denied the claim.

8. The applicant relied on a bundle of documents filed with the Tribunal on 27 October 2023. It was marked Exhibit A and included a report from Mr Erich Kannen dated 23 October 2023 and statutory declarations of Tracy Ann Howard dated 26 October 2023 and Rachael Weaver dated 15 May 2023.

9. Neither Ms Weaver nor Ms Howard was cross examined.

10. The first and second respondents relied on a bundle of documents filed with the Tribunal on 15 December 2023. It was marked Exhibit 1 and included a report from Mr Robert Casey dated 23 October 2023

11. Mr Kannen and Mr Casey gave evidence concurrently and a joint report in the form of a Scott Schedule signed by Mr Kannen and Mr Casey dated 17 January 2024 was marked exhibit B.

12. An 8 page bundle of photos and extracts from the Vehicle’s manual was marked exhibit 2.

13. Each of the parties had also filed written submissions, with the first respondent primarily adopting the second respondent’s submissions.

THE CONTRACT FOR THE SALE OF THE VEHICLE

14. The Vehicle was sold pursuant to a written “contract for the purchase of a new or demonstrator vehicle” dated 13 December 2021 between the applicant and the first respondent, for the price of $191,001.01.

15. As noted by the applicant in its submissions, in respect of which, I understand there to be no dispute, the price was $181,600.00 plus on-road costs of $9,401.00. In that light, It seems to me that the refund if ordered ought to be for the price of the vehicle exclusive of the on-road cost, being $181,600.00.

JURSIDICTION

16. There is no dispute that, and I am satisfied that:

1. the applicant is a consumer for the purposes of S79D Fair Trading Act 1987 (NSW) (FTA);

2. the claim is in respect of a new motor vehicle used primarily for private purposes (S79 FTA),

3. for the reasons set out further below, the claim was lodged within three years of the cause of action occurring (S70L FTA);

4. the claim is a consumer claim within the meaning of S79E FTA because it involves a claim for the payment of a specified sum of money arising out of the supply of goods or the intended supply of goods in New South Wales, and

5. the tribunal has jurisdiction to hear and determine the dispute and to make orders pursuant to S79O FTA.

ISSUES

17. The applicant contends:

1. that the Vehicle’s high beam dipping function is defective, in summary, because it fails to dip for oncoming traffic and a fault message relating to the dipping feature appears almost constantly on the dashboard;

2. that by reason of the defect, the Vehicle fails to comply with an implied guarantee pursuant to s 54 of the ACL of acceptable quality;

3. that the defect is a major failure for the purposes of s 260 of the ACL;

4. that he rejected the Vehicle; and

5. that he is entitled to a refund of the Vehicle’s purchase price.

18. The applicant submits that the vehicle is defective and not of acceptable quality for the following reasons.

19. Firstly, it is not fit for all purposes for which goods of this kind are commonly supplied. The applicant says the defect with the high beams inhibits the capacity to safely drive in the evening - which is, of course an underlying purpose of any vehicle.

20. Secondly, it is not acceptable in appearance and finish. The applicant says that part of the defect is a constant warning/error message is appearing on the dashboard and that the message is shown randomly and prevents the driver from accessing any other information which is normally available from the steering wheel’s control buttons. The applicant also says that other messages which would normally appear on the dashboard are blocked out until the headlight warning message disappears. The applicant says that this impediment detracts from the overall internal appearance of the vehicle (and is a further safety hazard).

21. Thirdly, it is not safe because the defect with the high beam dipping feature is an obvious safety hazard for both the driver as well as oncoming vehicle. The applicant also says that, similarly, the manner by which the warning/ error message remains on the dashboard is also a safety hazard because it is distracting to the driver, as it randomly appears and disappears.

22. Fourthly, for the reasons stated, the Vehicle is not free from defects.

23. The applicant then submits that the defect is so severe that it amounts to a major defect for the purpose s 260 of the ACL because:

1. the Vehicle would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure.

2. the Vehicle significantly departs from the descriptions and advertisements advanced by the respondents, referring to “proclamations of the vehicle possessing” “effortless agility” and “exemplary safety”.

3. the Vehicle is substantially unfit for its “obvious purpose being to safely transport passengers and cannot easily and within a reasonable time be remedied”.

4. the Vehicle is unsafe.

24. The respondents deny that the Vehicle is defective or not of acceptable quality and that to the extent of any issue with the Vehicle, it could not be characterised as a major failure for the purposes of the s 260 of the ACL.

25. Although not noted in their written submissions, the respondents also submitted at the hearing, that it was open for the Tribunal to find that the rejection of the Vehicle (which was agreed to have been the date of filing of the earlier proceedings on 23 March 2023) was not within the “rejection period” as defined in the ACL.

26. In that light the primary issues or matters for consideration are:

1. Whether there is defect with the Vehicles intelligent lighting system such that when in automatic mode, the function for the dipping of high beam lights is not functioning and if so to what extent and there is a constant warning message as described by the applicant on the dash when in automatic mode for left-hand side driving.

2. Subject to a consideration of (1) whether the vehicle was of acceptable quality at the time it was supplied.

3. If not of acceptable quality, whether there was a major defect with the Vehicle.

4. Whether the notice of rejection (which was agreed to be the date of commencing the proceedings that is the previous proceedings being 23 March 2023) was within the rejection period.

5. Subject to a consideration of (1) to (4), whether the Tribunal is satisfied that any orders to be made will be fair and equitable to all the parties.

RELEVANT SECTION SOF THE FTA AND THE ACL

27. By reason of ss 28 and 32 FTA, the ACL is a law of New South Wales.

Australian Consumer Law

28. Section 54, ACL, “Guarantee as to acceptable quality”, states that:

(1) If: (a) a person supplies, in trade or commerce, goods to a consumer; … there is a guarantee that the goods are of acceptable quality.

(2) Goods are of acceptable quality if they are as: (a) fit for all the purposes for which goods of that kind are commonly supplied; and (b) acceptable in appearance and finish; and (c) free from defects; and (d) safe; and (e) durable; as a reasonable consumer fully acquainted with the state and condition of the goods (including any hidden defects of the goods), would regard as acceptable having regard to the matters in subsection (3).

(3) The matters for the purposes of subsection (2) are: (a) the nature of the goods; and (b) the price of the goods (if relevant); and (c) any statements made about the goods on any packaging or label on the goods; and (d) any representation made about the goods by the supplier or manufacturer of the goods; and (e) any other relevant circumstances relating to the supply of the goods.

29. Section 55 ACL states, inter alia, that:

(1) If: (a) a person supplies, in trade or commerce, goods to a consumer; … there is a guarantee that the goods are reasonably fit for any disclosed purpose, and for any purpose for which the supplier represents they are reasonably fit.

30. “Supply” is defined in s 2 ACL in relation to goods to include supply (including re-supply) by way of sale, exchange, lease, hire or hire-purchase.

31. “Manufacturer” is defined in s 7 of the ACL to relevantly include:

(b) a person who holds himself or herself out to the public as the manufacturer of the goods

(e) a person who imports goods into Australia if:

(i) the person is not the manufacturer of the goods;

(ii) at the time of the importation, the manufacturer of the goods does not have a place of business in Australia.

32. Further, subsection 7 (3) ACL headed “Deemed importation of goods”, provides that if goods are imported into Australia on behalf of the person, the person is taken for the purposes of paragraph (1) (e), to have imported the goods into Australia.

33. The remedies for a breach of the consumer guarantees are set out ss 259-277 ACL.

34. Sections 259 to 266 are concerned with actions against suppliers of goods.

35. Subsection 259 (1) provides that a consumer may take action under this section if:

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

(b) a guarantee that applies to the supply … is not complied with.

36. Subsection 259 (2) then provides that if the failure to comply with the guarantee can be remedied and is not a major failure:

(a)  the consumer may require the supplier to remedy the failure within a reasonable time; or

(b)  if such a requirement is made of the supplier but the supplier refuses or fails 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 of the ground or grounds for the rejection.

37. Subsection 259 (3) provides that 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 of the ground or grounds for the rejection; or

(b) by action against the supplier, recover compensation for any reduction in the value of the goods below the price paid or payable by the consumer for the goods.

38. Subsections 259 (4) and (5) provide that in addition to ss 259 (2) and (3),

(4)   The consumer may, by action against the supplier, recover damages for any loss or damage suffered by the consumer because of the failure to comply with the guarantee if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure.

(5)   Subsection (4) does not apply if the failure to comply with the guarantee occurred only because of a cause independent of human control that occurred after the goods left the control of the supplier.

39. Section 260 deals with when a failure to comply with a consumer guarantee is a “major failure”. It states:

260 When a failure to comply with a guarantee is a major failure

A failure to comply with a guarantee referred to in section 259(1)(b) that applies to a supply of goods 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) the goods depart in one or more significant respects: (i) if they were supplied by description—from that description; or (ii) if they were supplied by reference to a sample or demonstration model—from that sample or demonstration model; or

(c) the goods are substantially unfit for a purpose for which goods of the same kind are commonly supplied and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or

(d) the goods are unfit for a disclosed purpose that was made known to: (i) the supplier of the goods; or (ii) a person by whom any prior negotiations or arrangements in relation to the acquisition of the goods were conducted or made; and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or

(e) the goods are not of acceptable quality because they are unsafe.

40. Section 262 (a) ACL relevantly provides that a consumer is not entitled to reject goods if the “rejection period” for the goods has ended.

41. Pursuant to ss 262(2), the rejection period is:

… the period from the time of the supply of the goods to the consumer within which it would be reasonable to expect the relevant failure to comply with a guarantee referred to in section 259(1)(b) to become apparent having regard to (a) the type of goods; and

(b)  the use to which a consumer is likely to put them; and

(c)  the length of time for which it is reasonable for them to be used; and

(d)  the amount of use to which it is reasonable for them to be put before such a failure becomes apparent.

42. Section 263 concerns the consequences of a consumer rejecting goods. A consumer will be entitled to reject goods where the supplier has refused or failed to remedy the failure in a reasonable period, or at all (see s 259(2)(b)(ii)) or where the failure cannot be remedied or is a major failure (see s 259(3)(a)).

43. If goods are rejected, the consumer must return the goods to the supplier and the supplier must refund the money to the consumer (s 263(4)(a)) or replace the rejected goods with goods of the same type if such goods are reasonably available (s 263(4)(b)).

44. Sections 267 to 270 of the ACL are concerned with what action can be taken against suppliers of services where there is a failure to comply with a guarantee that applies to the services.

45. Although the evidence included evidence of repairs and maintenance to the Vehicle, the claim for relief is not concerned with those services but with the quality of the Vehicle at the time it was supplied.

46. Sections 267 to 270 ACL are therefore not relevant to the claim.

47. Sections 271 to 273 concerns actions against manufacturers.

48. Section 271 states:

271 Action for damages against manufacturers of goods

(1) If:

(a) the guarantee under section 54 applies to a supply of goods to a consumer; and

(b) the guarantee is not complied with;

an affected person in relation to the goods may, by action against the manufacturer of the goods, recover damages from the manufacturer.

…

49. Section 272 sets out the nature of the damages that an “affected person” is entitled to recover against manufacturers, and s 273 sets out time limits for bringing actions against manufacturers.

50. As noted below, the consumer is not however entitled to refund from the Manufacturer, and the applicant does not seek any relief against the second respondent manufacturer.

RELEVANT PRINCIPLES

51. Whether there has been a breach of ss 54 as to acceptable quality or 55 as to fitness for purpose depends on the condition of the vehicle at the time it was supplied to the consumer (Volkswagen Group Australia Pty Ltd v Saad [2022] NSWCATP 133 (Volkswagen v Saad) at [61] to [64]).

52. Claims made under s 54 in respect of motor vehicles will usually involve an allegation that there was something inherent in the condition at the time of supply that made the vehicle not of acceptable quality, including the risk of future mechanical repairs (Volkswagen v Saad at [61] to [64]).

53. Principle’s to be applied in determining whether goods are of an acceptable quality as outlined in Vautin v By Winddown (No 4) [2018] FCA 426; (2018) 362 ALR 702 at [142] (see also Edwards v Caravan v RV Central Pty Ltd [2022] NSWCATD 26 at [18]) include:

(a) The test as to whether goods are of an “acceptable quality” is an objective one; being taken from the perspective of a “reasonable consumer” …

(b) The question for the “reasonable consumer” is whether the goods in question have the identified qualities enumerated in 54(2) to an “acceptable standard”. ….

(c) The “acceptable standard” is used as the yardstick against which the qualities of the goods are to be measured. It is ascertained by a consideration of the matters referred to in s 54(3); ….

(d) It is necessary the goods have all of the qualities identified in s 54(2) to the ascertained acceptable standard. ….

(e) In the assessment of whether the goods meet that relevant standard, the reasonable consumer is taken to be fully acquainted with the state and condition of the goods (including any hidden defects of the goods).

(f) If the goods supplied do not have all of the identified qualities to the acceptable standard, they will not be of an “acceptable quality”.

54. In so far as a consumer alleges that a vehicle was not of acceptable quality at the time of supply because it was not free from defects (ss 54 (2) (c) ACL(NSW)), they must establish that there was an actual or latent defect in the vehicle at the time of supply which rendered it of unacceptable quality, however it is not necessary for the consumer to prove the precise nature of the defect (Alliance Motor Auctions Ltd v Saman [2018] NSWCATAP 137 at [14] to [23]).

55. In respect of s 260 ACL (NSW), which sets out five measures against which non-compliance is to be assessed for the purposes of determining whether there is a “major failure” the Appeal Panel said [85] to [89] in Safi v Heartland Motors Pty ltd t/as Heartland Chrysler [20167] NSWCATAP 80 (“Safi”):

… for there to be a major failure it was not necessary for the claimant to establish each of the matters set out in s 260, establishing one is sufficient. ….

The first measure, under s 260(a), is whether “the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure”.

Subsection 260(a) applies to a generic “reasonable consumer” who acquires goods. It has the broadest and most general application. In contrast, s 260(d), where goods are unfit for a disclosed purpose, only applies when there have been specific negotiations about purpose between a consumer and a supplier. Similarly, s 260(b) only applies where goods have been acquired by description, sample or as a demonstration model.

Subsections 260(c) and 260(e), namely where goods are “substantially unfit” or where they are “unsafe”, direct specific attention to the nature and extent of the failure. Whereas s 260(a) directs attention to the mind of the reasonable consumer, although the nature and extent of the failure is relevant in a contextual sense. There is an overlap between ss 260(a), 260(c), and 260(e). For instance, if it is established that goods are unfit for the purpose for which goods of the same kind are commonly supplied and that they cannot be remedied easily or in a reasonable time, it follows that a reasonable consumer, fully acquainted with this fact, would not have acquired the goods. The same can be said of goods that are found to be unsafe. However, the reverse is not true. Subsections (c) and (e) require proof of specific factual matters in relation to the nature of the failure in the goods, subsection (a) does not.

Subsections (a), (c) and (e) of s 260 are closely linked to the consumer guarantee of “acceptable quality” under s 54. Relevantly, s 54 requires that, among other things, goods be “fit for all purposes which goods of that kind are commonly used” and “safe” which is to be adjudged by the “reasonable consumer fully acquainted with the state and condition of the goods”. As such, the inquiry as to whether goods comply with the guarantee of acceptable quality and any findings about this matter will be relevant to the inquiry about whether such failure is a major failure for the purposes of s 260.

56. Relevant to a determination of whether there has been a major failure to comply with the guarantee of acceptable quality, the Appeal Panel said in Safi at [101] and [102]:

101 Having regard to these cases and the commentary, where there is non-compliance with the guarantee of acceptable quality, as alleged in this case, we find that the following matters will be relevant to the question of whether this amounts to a “major failure” under s 260(a):

(1) A major failure may be constituted by one defect or a series of specific or individual defects which, when taken as a whole, constitute a major failure;

(2) The test of whether the goods “would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure” is an objective one;

(3) A “reasonable consumer” would expect teething problems, even in a new vehicle;

(4) The question to ask is whether the reasonable consumer, given the option of acquiring that particular good or alternatively purchasing either nothing or a different model, would not have acquired the good;

(5) Defects which result in goods failing to comply with the guarantee of acceptable quality will not invariably be a major failure and it will depend on the nature and extent of the failure; and

(6) The cost of repair, in proportion to the purchase price, and the question of whether the defects can be remedied easily in a timely manner are relevant considerations.

102   In our view, the purchase price for the goods and the nature of the defect are also relevant considerations for a “reasonable consumer”.

57. The remedial provisions under s 259 ACL including the entitlement to reject the goods and therefore the consequences of rejecting the goods provided for in (s 263 ACL (NSW)) are however only available to consumers against the person who supplied the goods to the consumer (Volkswagen v Saad at [82], [85] & [89]).

58. The remedies available against a manufacturer because of a breach of a consumer guarantee are limited to claims for damages (Volkswagen v Saad at [93] and [105]) although at [105] the Appeal Panel was referring specifically to the power of the Tribunal to make a work order against a manufacturer.

59. Where the consumer is claiming a replacement or refund, the consumer must reject the goods within the period following supply in which it would be reasonable to expect the failure to comply with the consumer guarantee to have become apparent having regard to the matters set out at s 262 (2) ACL, but the required rejection period has no relevance to other relief sought against a supplier nor any of the relief available against a manufacturer (Volkswagen v Saad at [124] to [130]).

60. Further, the Tribunals jurisdiction to hear a consumer claim is governed by s 79L FTA requires the claim to be lodged not more than 3 years after the cause of action accrued, being when facts which constitute the elements of the relevant cause of action crystallise or combine so that all the necessary elements necessary to entitle a person to make a consumer claim are present (Volkswagen v Saad at [122] to [123]).

OUTLINE OF THE EXPERT EVIDENCE

61. Consideration of whether the Vehicle was defective as claimed and whether that defect was a major failure is primarily dependant on the competing expert evidence.

62. Mr Kannen’s report noted that he inspected the Vehicle on 23 October 2023 at 8.00 pm at Mortlake for the purpose of identifying any defects, that it was dark at the time and that when he entered the Vehicle he noticed what he described as a warning message which read “Check dipped beam setting left / right side traffic”, that the message disappeared and re appeared at short intervals of about 10 to 15 seconds, that at the time the head lights high beam was set to automatic and that he continued his assessment, and says that he found and otherwise noted that:

1. That the high beam setting offers four alternatives, manual, two automatic settings between right or left hand side driving condition and an automatic setting which he said detects driving conditions without driver input.

2. He did not use electronic diagnostic equipment.

3. He examined documentation provided by the applicant recording the Vehicle having been left with McGrath Canberra Pty Ltd trading as Mercedes-Benz Canberra.

63. I have referred to the documentation, being service records in more detail below.

64. Mr Kannan’s report states that he was instructed to:

1. Inspect the vehicle and detail the vehicle’s defect(s), if any;

2. Explain how the vehicle’s defect(s), affect the vehicle;

3. Express his opinion as to whether one of the defects is a major defect, or whether the aggregate of the non-major defects adds up to a major defect; and

4. Express an opinion as to whether the defect(s) was caused by poor maintenance, misuse, abnormal use or some other action or inaction by somebody who drove the vehicle.

65. The report then identifies the following conclusions having been made by him.

66. Firstly, that the vehicle has an electronic defect that affects the headlight’s high beam setting because, according to Mr Kannan:

1. a warning message on the vehicle’s dashboard information screen alerts the driver of a malfunction with the automatic high beam function of the headlights; and

2. the driver has four high beam options (i.e., manual, automatic or left or right side traffic option); and

3. no matter which option is chosen the defect manifests itself by either a message on the dashboard or by the [high beam] dipping function not working.

67. Secondly, the effect of the claimed defect is that:

1. the warning message, which shows up randomly, prevents the driver from viewing or accessing other messages and is distracting to the driver;

2. the head light dipping function does not cause the high beams to dip for oncoming traffic regardless of whether in the automatic or left hand side (for Australia) option, potentially blinding oncoming traffic and thereby creating a traffic hazard.

68. Thirdly, that the defect is a major defect because:

1. The Vehicle is a premium Vehicle.

2. The Vehicle was purchased because it had certain safety features, in particular the automatic high beam dipping function.

3. Vehicles that cost less than half the price have an automatic headlight dipping function.

4. The cost to replace the relevant electronic module usually runs into thousands of dollars.

5. The claimed defect has not been able to be repaired.

6. In the absence of a permanent “fix” the future repair cost cannot be reliably estimated.

7. Even the manual high beam dipping function is compromised by the message which is distracting to the driver and prevents the driver using other steering wheel controls.

69. Relevantly, a photograph of the warning message being referred to by Mr Kannen appears in a box between the speedometer and a reading of the revs per minute and is in ‘white’.

70. The significance of it being in white is that Mr Kannen accepted in cross examination that messages in white are “information messages”, the messages in yellow are “alerts” and that messages in red are “warnings”.

71. In those circumstances I am not satisfied that the message that arises is a fault or a warning message but in fact an “information message”.

72. Mr Casey notes in his report that the complaints raised by the applicant and Mr Kannen, in his view, appear to stem from a misunderstanding of how the Vehicle’s head lights function.

73. He then describes how the headlights function in the following way.

1. Under Australian Design Rules (ADR’) when headlights are dipped (i.e., low beam) the headlight closest to oncoming traffic is intentionally angled slightly away from the oncoming traffic, whilst the headlight furthest from the oncoming traffic is angled more straight ahead. He said this situation is universal however the headlight closest to the oncoming traffic can be different depending on whether someone is driving in a left-hand drive or a right-hand side drive country.

2. The Vehicle has an intelligent light system that uses an array of Light Emitting Diodes (LED’s) mounted into each headlamp which allows individual LED’s to be turned on as needed, meaning the one system can be used regardless of whether in a left hand drive or right hand drive market.

3. “Dipped beam setting” is a reference to as the use of the vehicle lights in low beam, when the light closest to the traffic is to be focused slightly away from the oncoming traffic. A setting in the Vehicle headed “Dipped beams” allows the system to be set for “Right side traffic”, “Left-side traffic (for Australia)” or “Automatic”.

4. When in automatic mode the vehicle goes through a process of identifying its location via GPS and then adjusting to whether it is operating in right hand side or left hand side driving condition. He noted that when in automatic, the default position is to right side traffic conditions, but it would automatically adjust after 10 or so minutes.

5. The “dipped beam setting” is different to the function of the dimming of the high beam which is the returning from high beam to low beam when there is oncoming traffic.

6. He said that the intelligent lighting system extends to the high beam functionality which can be operated in either an automatic or a manual mode using the lever or stalk adjacent to the steering wheel.

7. When in automatic, the high beam dimming system detects oncoming traffic or other vehicles being approached from behind and will automatically switch off those LED’s in the headlamps that would otherwise shine into the eyes of the oncoming driver or driver of the Vehicle in front but leave other LED’s illuminated.

74. Mr Casey then noted that he tested the Vehicle and two other identical vehicles, performing more than 45 tests over 9 hours on 16 and 17 November 2023, noted that all three vehicles behaved in the same way and that he observed that:

1. When left hand side mode was selected from the dipped beam menu, the dipped headlight beams were appropriate for Australian roads.

2. When right hand side mode was selected from the dipped beam menu, after about 10 minutes, an information message appeared on the dashboard, stating “check dipped beam settings Left – right side traffic”, that although the message could be cancelled, it would re appear at regular intervals, and that when Left-hand side traffic was selected, the message did not re appear.

3. The message, “Check dipped beam settings Left – right side traffic” is not a warning, but or an advisory message to say that the Vehicle recognises that it is in a Left-hand side traffic market, but its dipped beam settings are currently set to Right-hand side traffic.

4. When the automatic mode was selected from the dipped beam menu, after a drive cycle had been completed and a satellite lock achieved by the Vehicle’s GPS system, the dipped beam setting was set to Left- hand side traffic.

5. When he first started the Vehicle, the dipped beam mode had been manually set to Right- side traffic.

6. When the headlights were set to manual high beam, they functioned normally, with the high beam being toggled on and off by pulling the control stork beside the steering wheel.

7. When automatic head lights were activated, a symbol illuminated on the dashboard to indicate they were active and that a second symbol illuminated when the headlights dipped.

8. That in respect of the operation of high beams, all three Vehicles functioned the same and functioned correctly.

CONSIDERATION

75. As noted above, the Vehicle was purchased in December 2021 as a new Vehicle.

76. Unrelated to the defect alleged in these proceedings:

1. in February 2023 the applicant received a recall notice in relation to a third row seat locking mechanism in the vehicle; and

2. on 9 February 2023 a recall notice was issued to the applicant in relation to the mounting of a rear door trim bar.

77. A service tax invoice from McGrath Canberra Pty Ltd trading as Mercedes-Benz Canberra dated 18 June 2022 records that the Vehicle had travelled 25,252 kilometres, and states.

CUSTOMER CONCERN - LEFT AND RIGHT TRAFFIC BEAMS DIPPED WARNING ON DASH

UNABLE TO CONFIRM DUE TO NOT BEING NIGHT TIME. RAN QUICK TEST

AND CHECK FOR FAULTS. NO FAULT FOUND.

CHECK DIPPED BEAM SETTINGS AND FOUND INCORRECT SETTINGS.

CHANGE TO CORRECT SETTING AND RECTIFIED COMPLAINT.

CUSTOMER TO MONITOR.

78. This appears to be the first record of the issue being raised.

79. A service tax invoice issued by Mercedes-Benz Canberra on 21 November 2022 has a handwritten notation “Dipped Beam Fault”.

80. A further service tax invoice from Mercedes-Benz Canberra dated 9 February 2023 records that the Vehicle had travelled 45,900 kilometres, and states:

CUSTOMERS CONCERN,

DIP LIGHT FUNCTION NOT WORKING.

HAS BEEN LOOKED MULTIPLE TIMES BEFORE.

DEFAULTS TO LEFT SIDE.

Confirmed concern.

Advised by Mercedes-Benz technical that no permanent fix is available at this time. Reset headlight DIP function as required.

81. On 23 March 2023 an application was filed in the Tribunal.

82. Those proceedings were withdrawn in the context of the Vehicle having to be inspected by one or other of the respondents.

83. The present proceedings were commenced in June 2023.

84. A service tax invoice from the first respondent dated 22 June 2023 records that the Vehicle has travelled 54,867 kilometres and states inter alia:

Left/Right traffic warning on dash.

Confirmed customer compliant. Carried out short test, no fault in system.

85. A further service tax invoice from Mercedes-Benz Canberra dated 5 October 2023 identifies that the Vehicle had travelled 63,596 kilometres and states:

CUSTOMER CONCERN – DIP HEADLIGHT WARNING BACK ON DASH.

REVERTS BACK TO RIGHT HAND SIDE TRAFFIC EVEN WHEN SET TO DIFFERENT SETTING. PLEASE CHECK WITH MITCHELL OR RYAN BEFORE CUSTOMER LEAVES.

VEHICLE PRESENTED TO DEALERSHIP ON 04/10 AS A DROP IN.

CONFIRMED CUSTOMERS CONCERN. VEHICLE WAS BOOKED IN 05/10.

FOR THE SAME CONCERN / FAULTS.

REPLICATED FAULT ON CLUSTER ‘CHECK DIPPED BEAM SETTING’.

RAN QUICK TEST.

NO FAULTS REPLICATED.

RESET AUTO DIP HEADLIGHTS ON AUTO.

FOUND WARNING MESSAGE ON CLUSTER.

RESET SETTINGS TO AUTOMATIC.

CUSTOMER IS PROVIDED WITH THE QUICK TEST.

AS PER REQUEST.

ALL OKAY.

86. Apart from the 22 June 2023 service record, the service records were those of McGrath Canberra Pty Ltd trading as Mercedes Benz Canberra “authorised Mercedes – Benz Sales, Service and parts”, and contrary to the applicant’s submissions and Mr Kannen’s report, were not provided by the first respondent, or for that matter, the second respondent.

87. In any event, mindful that:

1. the 18 June 2022 service record states “CHANGE TO CORRECT SETTING AND RECTIFIED COMPLAINT”;

2. the 22 June 2023 service record states “Left/Right traffic warning on dash. Confirmed customer compliant. Carried out short test, no fault in system”; and

3. the 5 October 2023 record states “RESET SETTINGS TO AUTOMATIC. CUSTOMER IS PROVIDED WITH THE QUICK TEST. AS PER REQUEST. ALL OKAY”,

the service records, particularly when read in the context of Mr Casey’s evidence of the operation of the lighting system and his observations, do not establish a defect that cannot be rectified, or more particularly, a major failure.

88. The statutory declaration of Rachel Weaver dated 15 May 2023 states inter alia:

After collecting the new vehicle from the McArthur Mercedes-Benz dealership a fault message appeared on the driver’s dash advising that there was an issue with the dipped beam setting on the auto headlights.

With the fault active on the vehicle it is not possible to set the headlights to auto function as the high beam will not switch to low beam when there is oncoming traffic...

The fault remains on the driver’s dash preventing the ability to obtain information that is usually accessible whilst driving from the menu on the steering wheel ...

The fault can be cancelled but constantly returns within 10 seconds, or after approximately two minutes from resetting the dipped beam setting in the vehicle’s main menu ...

From the first day of owning and driving the vehicle to this day all attempts to rectify, reset or repair the faults have failed.

For the final booking to rectify the faults the vehicle left at the Mercedes-Benz service centre. When I returned to collect the vehicle the service advisor advised that the faults had not been rectified and that they had been advised by the Mercedes-Benz technical and Mercedes-Benz Technical Germany that whilst they were aware of the faults with the vehicle there was no known fix and there is nothing further that can be done.

89. In circumstances where the service advisor was not named, is not an employee of either respondent, was not called to give evidence and it is not clear on the face of the evidence, even if the words were said, what he meant by “the faults” and “there was no known fix” I don’t place any weight on the evidence of what Ms Weaver says a “service advisor” advised her.

90. The statutory declaration of Tracy Howard, in summary states:

• that on 1 September 2023 she was driving the Vehicle and that “an error message appeared on the Dash”;

• the message read “check dipped beam setting (left – right side traffic)”

• she was unable to clear the message;

• because the message was distracting, she pulled over and stopped driving;

• that the applicant then drove;

• when the applicant was driving, they came across the kangaroo and although they avoided it, she did not see it earlier because the lights were on low beam because an error message over read the high beams from being activated.

91. In circumstances where the statutory declarations pre dates Mr Casey’s report and there is no evidence of an attempt to operate the lighting mindful of what Mr Casey says in his report and where Ms Howard does not give evidence as to and has no expertise in respect of the operation of the Vehicle’s lighting system, the evidence of Mr Howard does not assist to establish that the Vehicle is defective and that such defect is a major failure.

91. Mr Kannen inspected the Vehicle on 23 October 2023. His report is dated 24 October 2023.

92. Mr Casey inspected the Vehicle on 16 and 17 November 2023. His report is dated 12 December 2023.

93. I have set out the observations and opinions of both Mr Kannen and Mr Casey above.

94. In summary, Mr Kannen is of the opinion that the vehicle has an inherent electronic fault that was latent at the time of purchase, although it manifested itself almost immediately once in use, and says the defect affects the vehicle’s automatic headlight (high beam) dipping feature that fails to dip for oncoming traffic and causes a warning message to appear on the dashboard.

95. He gave evidence of the hearing that his inspection of the vehicle in summary involved the following.

96. Firstly, the vehicle was driven to his premises by the applicant’s wife and left running. He got into the vehicle. He noticed what he said was a warning message displayed on the dashboard’s information screen reading check dipped beam setting left/right traffic. He said the message disappeared and reappeared at short intervals approximately every 10 to 15 seconds.

97. Secondly, he says that he then drove the vehicle for about 20 minutes and during that time other vehicles flashed their high beams to him indicating to him that the high beam mechanism in the vehicle he was driving was not dipping.

98. Mr Kannan also said that the issue with the high beam creates challenges with, for example, uneven roads and inclines.

99. Mr Casey accepted that on occasions the high beam, when the Vehicle was being driven, for example, on uneven country roads at high speeds, may not dip, but observed to the effect that that is just a feature of the lighting LED system use, and in those situations the driver can revert to manual use of the high beam.

100. I prefer the evidence of Mr Casey for the following reasons.

101. Mr Casey performed in the order of 40 tests over a period of nine hours including electronic testing in respect of both the Vehicle and two other vehicles of the same model, where as Mr Kannen’s observations were limited to those from a 20-minute drive near his home.

102. Mr Kannen did not, following receipt of Mr Casey’s report inspect the Vehicle again to test the vehicle having regard to the testing performed by Mr Casey and Mr Casey’s observations and opinions.

103. Mr Kannen did not identify in what respect, if any the Vehicle did not comply with the Australian Design Rules.

104. The majority of Mr Kannen’s experience appears to be in pre-purchase motor vehicle inspections, rather than in the operation of motor vehicles and he had to correct his evidence in respect of the operation of the lighting system.

105. Mr Kannen in his report overstated the message “Check dipped beam setting left / right side traffic” as being a warning message, rather than an information message, which, in cross examination, he accepted it was.

106. Mr Kannen did not give any detailed evidence, other than a short reference to his experience with his own vehicle in cross-examination, as to how the dipped beam settings (whether in right hand side traffic, left-hand side traffic or automatic mode) or the high beam settings (whether in manual or automatic mode) operate. Mr Casey however gave detailed evidence as to how they operate.

107. Mr Kannen did not give any evidence as to the operation of the Vehicle relative to other vehicles of the same make and model. Mr Cassey did.

108. To the extent that the respondent raised that it was open to the Tribunal to find that the vehicle was not rejected within the rejection period, in circumstances where:

• the Vehicle was purchased in December 2021;

• a concern regarding the lighting was first raised in about June 2022; and

• the rejection is accepted as having been made when the proceedings were commenced in March of 2023,

I am satisfied that:

1. Notice of rejection was given in March 2023.

2. That it was given within the rejection period.

110. Having regard to the evidence and my observations above I am satisfied of and find the following:

1. The dipped beam function of the Vehicles lighting system is concerned with the light closet to the oncoming traffic pointing away from the oncoming traffic.

2. The high / low beam function is concerned with the creation of black out zones when approaching oncoming traffic or approaching other vehicles from behind, when the vehicle’s high beam is in operation.

3. In that light, the dipped beam function and the high beam function of the Vehicles lighting are different.

4. The high beam function when in automatic operates as intended but on occasions may not dip automatically.

5. That when operated manually the high beam function always works as intended.

6. That when the dipped beam function is in left-hand drive mode, the light closest to the oncoming traffic points away from the oncoming traffic.

7. When the dipped beam function is in automatic mode, the Vehicles lighting system may, at the commencement of driving, operate as if in a right-hand drive traffic zone such that the headlight closest to the middle of the road will be pointed straight ahead rather than away from the oncoming traffic, but once a satellite lock had been achieved by the GPS systems, the dipped beam setting would set to left-side traffic.

8. When the dipped beam function is in right - hand drive mode, the Vehicle, when driven in Australia, will detect that it is in left hand drive traffic and an information message will be displayed stating “check dipped beam settings Left-right side traffic”, and that when the dipped beam function is set to Left- side traffic (whether manually or automatically) the message will stop.

111. I therefore find that the Vehicle’s lighting system including both the dipped beam function and the high beam function are operating as intended and are not defective.

112. I am therefore not satisfied that the vehicle suffers from a latent defect in respect of the dipping of the lights when in high beam or in respect of the message that appears “check dipped beam setting left/right side traffic” when the Vehicle’s dipped beam function is in right hand side traffic mode or the automatic mode before it has identified that it ought to be left hand side mode.

113. I am therefore satisfied, having regard to section 54 ACL that the vehicle was free from defects and having regard to the nature and the price of the Vehicle, was of acceptable quality at the time it was supplied.

114. The application will therefore be dismissed.

115. In circumstances where the respondents were not legally represented and the second respondent remained a party to the proceedings at its own request despite the relief of refund not being able to be claimed against it, my provisional view is that each party ought to pay their own cost.

116. In respect of costs:

1. If any party wishes to seek an order in respect of costs other than each party is to pay its own costs, it is to file and serve submissions and any evidence in support of its application for costs within 14 days.

2. Any submissions or evidence in response are to be filed and served within a further 14 days.

3. Any submissions in respect of costs are to state whether the party consents to the question of costs being determined on the papers, and if not why.

4. If there is no application for costs, then there will be no order as to costs, which the intent that each party pay its own costs.

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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: 02 May 2025