VIP Automotive Solutions Pty Ltd v Hodgson
[2022] SADC 22
•25 February 2022
DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Minor Civil Review)
VIP AUTOMOTIVE SOLUTIONS PTY LTD v HODGSON
[2022] SADC 22
Judgment of his Honour Judge Burnett
25 February 2022
MAGISTRATES - APPEAL AND REVIEW - SOUTH AUSTRALIA
TRADE AND COMMERCE - COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION - CONSUMER PROTECTION - MISLEADING OR DECEPTIVE CONDUCT OR FALSE REPRESENTATIONS - CHARACTER OR ATTRIBUTES OF CONDUCT OR REPRESENTATION - EXCLUSION CLAUSES, DISCLAIMERS AND ACKNOWLEDGMENTS
The applicant, VIP Automotive Solutions Pty Ltd (VIP), has sought review of a minor civil action in which the Magistrate awarded damages in favour of the respondent (who was the applicant in the Magistrates Court), Mr Adrian Hodgson.
Mr Hodgson had engaged VIP to conduct a vehicle inspection and appraisal and to provide a report in relation to the condition of a 2009 Mini Cooper sedan which was located in Corlette in New South Wales. Mr Hodgson was interested in purchasing the vehicle. On 14 June 2017 Mr Hodgson engaged VIP to conduct an inspection of the motor vehicle and provide a report as to its condition. The report indicated that a road test was taken as well as a visual inspection. The inspector who conducted the inspection on behalf of VIP indicated, inter alia, that the clutch/gearshift (manual) was in good condition.
Mr Hodgson subsequently purchased the vehicle and arranged with VIP to transport the vehicle to South Australia.
When the vehicle was first driven by Mr Hodgson on delivery to South Australia, he observed the clutch was slipping and made arrangements to have the vehicle inspected by a specialist repairer, Adelaide Motor Masters Pty Ltd. They confirmed that the clutch needed replacement.
Mr Hodgson has claimed the costs of the replacement of the clutch from VIP.
Held:
1. VIP was not entitled to rely upon the exclusion clause that was contained in the Vehicle Inspection and Appraisal Report (“the Report”). The exclusion of liability in relation to latent damages did not apply to the road test and applied only to the visual inspection. In any event the exclusion clause did not operate to exclude liability under s 18 of the Australian Consumer Law.
2. The Magistrate was correct in finding that Mr Hodgson entered into the contract to purchase the vehicle as a consequence of the receipt of the Report from VIP.
3. The Magistrate was correct in finding the clutch was not in good condition. The Report was therefore not accurate.
4. On the evidence the Magistrate was correct in concluding that the vehicle was in the same condition when it arrived in Adelaide and when it was inspected by VIP. The Magistrate was correct in determining that the condition of the clutch could have been detected on the road test. Therefore, had the inspection been carried out without negligence, the defect in the clutch would have been ascertained. The statement in the Report that the clutch was in a good condition was therefore misleading.
5. It is speculation to suggest that the damage to the clutch was caused in transit or by Mr Hodgson. There was no evidence for either proposition.
6. The Magistrate was entitled to take a broad brush approach to the question of quantum when making a finding as to the true cost of the vehicle at the time that it was purchased.
7. The application for review is dismissed and the judgment of the Magistrate is affirmed.
Magistrates Court Act 1991 (SA) s 38(1), 38(6), 38(7), 38(8), 38(9); Australian Consumer Law (Cth) s 18, referred to.
Harradine v District Court of South Australia [2012] SASC 96; Gillott v District Court of South Australia [2019] SASC 132; Trittenheim Pty Ltd v H & H Gill Nominees Pty Ltd (1994) 63 SASR 434; Griggs v Noris Group of Companies (2006) 94 SASR 126; [2006] SASC 23; Wilczynski v District Court of South Australia [2016] SASC 51; Wilczynski & Anor v District Court of SA [2017] SASCFC 102; Robinson Helicopter Co. Incorporated v McDermott [2016] HCA 22; (2016) 90 ALJR 679; (2016) 331 ALR 550; Darlington Futures Ltd v Delco Australia Pty Ltd (1981) 161 CLR 500; Bowler & Anor v Hilda & Ors (1998) 80 FCR 191; Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592; Benlist Pty Ltd v Olivetti Australia Pty Ltd [1990] ATPR 41-043; Campbell v Backoffice [2009] HCA 25; (2009) 238 CLR 304; I & L Securites Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 201 CLR 109; Henville v Walker [2001] HCA 52; (2001) 206 CLR 459, considered.
VIP AUTOMOTIVE SOLUTIONS PTY LTD v HODGSON
[2022] SADC 22Civil
Introduction
This is a review pursuant to s 38(6) of the Magistrates Court Act 1991 (SA) of a minor civil action in which the Magistrate awarded damages in favour of the applicant in the sum of $1750 together with various costs. The applicant in the Magistrates Court and the respondent in this Court, Mr Adrian Hodgson, was the purchaser of a 2009 Mini Cooper Sedan (the vehicle). As the vehicle was located in Corlette in New South Wales, he engaged VIP Automotive Solutions Pty Ltd (VIP), the respondent in the Magistrates Court (and the applicant in the proceedings before this Court), to conduct a vehicle inspection and appraisal and provide a report. Mr Hodgson subsequently engaged VIP to collect the vehicle from the vendor in New South Wales and transport it to Adelaide.
Mr Hodgson claimed that there was a defect with the clutch which required the clutch to be replaced. Mr Hodgson claimed that he entered into the contract to purchase the vehicle as a result of the negligent and misleading statements made by VIP in the vehicle inspection and appraisal report about the clutch and also in an oral conversation with the VIP inspector about the condition of the vehicle. Mr Hodgson claimed a total of $7367.17 in damages which included $3162.66 to replace the clutch and also damages for some other alleged defects. The Magistrate dismissed the other claims and only allowed $1750 in respect of damages for the clutch repair.
VIP was dissatisfied with the decision of the Magistrate and sought a review of that decision.
In its Notice of Review, VIP contended that it should not be liable for any failure in its part to detect and report on the condition of the clutch of the vehicle. In its written case on the Review, VIP raised some 28 grounds of review, many of which were repetitious or were different expressions of the same ground of review. The grounds of review can be grouped into the following categories:
(1)VIP provided no warranty as to the accuracy of its vehicle inspection and appraisal report (the Report). VIP submitted that the part of the Report that was entitled Product Disclosure Statement (PDS) stated that the Report was based on a visual inspection and did not cover latent issues;
(2)Mr Hodgson made the decision to purchase the vehicle in its “as is” condition based on his own judgment and the visual inspection. That was confirmed by the Bill of Sale and by Mr Hodgson upon delivery;
(3)The Report accurately described the condition of the vehicle;
(4)The clutch was checked on the inspection and did not show any signs of wear and tear;
(5)It was not known what happened to the clutch after the inspection, including when it was being transported;
(6)Mr Hodgson may have contributed to the faulty clutch by his own driving, including when driving the vehicle onto his own driveway after it had been delivered;
(7)There was no basis for the Magistrate’s findings that the tyres were worn and that it appeared that the vehicle was driven hard at some stage;
(8)The report from Adelaide Motor Masters does state when the clutch failed. The time that the clutch failed cannot be determined;
(9)There was no basis for the conclusion by the learned Magistrate that the clutch was 90% worn at the time of inspection;
(10)In circumstances where there were three possible components of blame in this dispute, being VIP, the transporter, CEVA and Mr Hodgson himself, VIP should not be made liable for the loss suffered by Mr Hodgson;
(11)The value of the motor vehicle at the time of inspection was more than the amount paid by Mr Hodgson. As Mr Hodgson paid less than what the vehicle was worth, he suffered no damage.
Application for Review
This review is conducted pursuant to s 38(6) to 38(9) of the Magistrates Court Act. On this review, the Court may inform itself as it thinks fit and, in doing so, is not bound by the rules of evidence. The Court may, if it thinks fit, rehear the evidence taken before the Magistrates Court. In hearing and determining this review, the Court must act according to equity, good conscience and the substantial merits of the case, without regard to technicality and legal form. It is important to note I am conducting a review of the matter and not a review of the judgment.
Section 38(1) of the Magistrates Court Act sets out provisions which are applicable to the conduct of the minor civil action. These provisions provide as follows:
(1) The following provisions are applicable to the trial of a minor civil action:
(a) the trial will take the form of an inquiry by the Court into the matters in dispute between the parties rather than an adversarial contest between the parties;
(b) the Court will itself elicit by inquiry from the parties and the witnesses, and by examination of evidentiary material produced to the Court, the issues in dispute and the facts necessary to decide those issues;
(c) the Court may itself call and examine witnesses;
(d) the parties are not bound by written pleadings;
(e) the Court is not bound by the rules of evidence;
(f) the Court must act according to equity, good conscience and the substantial merits of the case without regard to technicalities and legal forms.
Sections 38(6) and 38(7) of the Magistrates Court Act require an examination of the inquisitorial process undertaken by the Magistrate to determine whether there had been a trial by the Magistrate in accordance with those provisions. The conduct of a minor civil action must be considered in the context of the statements by Blue J in Harradine v District Court of South Australia[1] that the role of the Magistrate in such an action is that of an inquirer rather than managing an adversarial contest between the parties.
[1] [2012] SASC 96 at [40]-[41].
In Gillott v District Court of South Australia,[2] Peek J discussed the meaning of the phrase ‘equity, good conscience and the substantial merits of the case’ and quoted from the decision of Olsson J in Trittenheim Pty Ltd v H & H Gill Nominees Pty Ltd,[3] in which His Honour noted that the meaning of that phrase must be construed in the context of the nature of the issues involved and, where appropriate, the clear purpose of the relevance of the relevant statute. Olsson J went on to hold that in certain cases the phrase required that the Court should adopt a broad approach of common sense and common fairness, eschewing all legal or other technicality. In Griggs v Noris Group of Companies,[4] White J referred to the phrase in the context meaning good sense and the natural justice of the matter. At times, he held the expression that the decision-maker was empowered to do whatever he or she might think necessary to achieve fairness between the litigants.
[2] [2019] SASC 132 at [40]-[46].
[3] (1994) 63 SASR 434.
[4] (2006) 94 SASR 126; [2006] SASC 23 at [31].
Given the nature of the minor civil review and its purpose to achieve an economical and efficient disposition of the matter, I consider that the phrase ‘equity, good conscience and essential merits of the case’ is used in the context described above, namely requiring the Magistrate to act according to good sense and the natural justice of the matter and to do whatever is necessary to achieve fairness between the parties in relation to their legal rights, eschewing legal or other technicalities. Regard must be had to the substance of the claim while ensuring a fair trial including permitting the parties to have an opportunity to address the real issues in dispute.
The decision of this Court on review is final and is not subject to appeal, pursuant to s 38(8) of the Magistrates Court Act.
On this review, I may affirm the judgment of the Magistrate or rescind it and substitute the judgment of this Court or rescind the judgment in its entirety.
Conduct of the Review
In Harradine v District Court of South Australia,[5] Blue J set out the principles that apply to a review by the District Court of a minor civil action. In relation to the relevance of the facts found by the Magistrate, Blue J held:
1. The review is not in the nature of an appeal stricto sensu.
2. The review is not necessarily a hearing de novo in that the Court is entitled to have regard to the evidence adduced before a magistrate and “may” rehear that evidence.
3. The review is not necessarily an appeal by way of rehearing in that it is a “review” (not an “appeal”), the Court may inform itself as it thinks fit, the Court must act according to the substantial merits of the case and the Court may rehear evidence without being confined by the “fresh evidence” rules which apply to appeals by way of rehearing.
4. The Court can tailor the nature of the hearing to the circumstances. In a case where the review will not turn on findings of fact or credibility of witnesses, the Court might simply have regard to the evidence adduced before a magistrate and a magistrate’s findings of fact. In a case which does turn on disputed issues of fact or credibility, the Court might simply proceed to hear the evidence afresh.
5. If the District Court concludes that a magistrate made an error vitiating the judgment and had not made findings of fact necessary to determine the matter, it will be necessary for the Court itself to hear the evidence relevant to those findings of fact (as it does not have power to remit the matter for rehearing).
6. To the extent that the Court does itself hear evidence, it should proceed in a similar manner to that provided by section 38(1), namely adopting the form of an inquiry by the Court rather than an adversarial contest between the parties. This is because section 38(7) provides that the Court may inform itself as it thinks fit and also because it would be incongruous if the District Court were to adopt a radically different approach to the hearing to that required to be adopted by a magistrate at first instance given that there is no power of remitter.
[5] [2012] SASC 96 at [53].
These principles were considered by Doyle J in Wilczynski v District Court of South Australia.[6] Although that decision was reversed, for other reasons, on appeal,[7] Doyle J held that s 38 of the Magistrates Court Act contemplated a range of different approaches that the judge on review may take. Those approaches included:
1.Re-hearing all the evidence and deciding the matter entirely on that basis.
2.Hearing no evidence and determining the matter based entirely on the evidence in the Magistrates Court.
3.Adopting a hybrid approach involving the receiving of some evidence or the hearing or receiving of some additional evidence, but also having regard to the evidence before the Magistrate.
[6] [2016] SASC 51.
[7] Wilczynski & Anor v District Court of SA & ors [2017] SASCFC 102.
Doyle J held that there may be more than one approach open to the judge on review, and that the judge has a broad discretion as to how to proceed with the review.
In the circumstances of this case, I considered that it was not necessary to hear further evidence and that I could determine the matter based on the evidence taken in the Magistrates Court. The complaints made by VIP related to the inferences drawn from the established facts and the legal conclusions from those facts. The person who conducted the inspection of the vehicle and prepared the Report on behalf of VIP, Mr Matthew Bowen, did not give evidence at the Magistrates Court and it was not proposed by VIP that he be called on the Review. I therefore did not consider that VIP was in a position to call any further admissible evidence on the Review. Mr Hodgson gave evidence at the trial before the Magistrate and any evidence that he might give on the Review would simply have been a repetition of that earlier evidence. I did not consider that there were any matters that he had failed to address in the Magistrates Court hearing. For these reasons, I did not consider there was any utility in permitting the parties to adduce further evidence on the Review.
I do not consider that I am as constrained as an Appeal Court in interfering with findings that are based on the credibility of witnesses. I am not limited to interfering with the Magistrate’s finding of facts in circumstances only where they are demonstrated to be wrong by incontrovertible facts or uncontested testimony or are glaringly improbable or contrary to compelling inferences.[8] That said, I have had regard to the findings of the Magistrate which were made after the trial and afterhearing the evidence of both parties.
[8] Robinson Helicopter Co. Incorporated v McDermott [2016] HCA 22; (2016) 90 ALJR 679; (2016) 331 ALR 550 at [43].
Conduct of the trial in the Magistrates Court
The trial in the Magistrates Court was conducted in an inquisitorial style as required by s 38(1)(a) of the Magistrates Court Act. Mr Hodgson gave evidence and Mr Vasilakis, a director of VIP, gave evidence. As I have said earlier in these reasons, Mr Bowen, the person who conducted the inspection on behalf of VIP, did not give evidence. Mr Vasilakis could give evidence about the practices and procedures of VIP when conducting an inspection rather than what Mr Bowen actually did on the inspection. Mr Hodgson gave evidence about what he did when he received the vehicle, how he first observed the defect in the clutch and the steps that he had undertaken to have the clutch repaired.
In addition, Mr Hodgson tendered a book of documents which was received into evidence. VIP tendered a bundle of photographs including photographs of the vehicle.
The findings of the Magistrate
The Magistrate made the findings set out below. As the Magistrate gave an ex tempore judgment, I will provide further detail of the relevant findings, where necessary, and set out any further findings where appropriate.
Mr Hodgson was the purchaser of the vehicle.
On 8 June 2017, VIP provided a quotation to Mr Hodgson for the transport of the vehicle from interstate to his driveway.[9] The quotation noted that VIP could arrange a pre-purchase inspection on any vehicle. The quotation included the Product Disclosure Statement (PDS) which was titled “Product Disclosure Statement – Very Important – Please Read First”. The PDS provided:
VIP… reports do NOT guarantee the said vehicle/or part thereof for any damages, breakdown, liability claims, latent issues, securities... neither does it represent any legal report or roadworthy certificate. VIP reports are merely to advise you the buyer of the overall basic visual condition of the said vehicle in the window of time allocated, with an aim to giving you, to the best of our ability, a fair, unbiased and honest appraisal of the vehicle.
Where applicable, VIP inspection reports must be read in conjunction with the accompanying photographs, and we strongly recommend you contact your inspection officer directly to clarify any issues, prior to purchasing the vehicle. We also recommend you seek a qualified second opinion after you have received the report and photographs.
As all visual inspections are carried out in an ‘allotted time window of opportunity’, the vehicle status may change immediately after the VIP inspection officer has completed the service and left the premises, thus rendering the inspection report inaccurate and possibly void, as situations/circumstances may change the vehicle status dramatically.
Mechanical components are not dismantled to confirm diagnosis. Engine cam belts are not inspected, it is recommended the cam belt be serviced in accordance with the manufacturers recommendations. The condition of brake linings, pads, drums and disc rotors are not determined during the visual inspection, however the overall brake performance is assessed during the road test. Instrumentation is not checked for accuracy. Engine additives and certain body detailing may cover up faults which may not be detectable during the inspection. Some noises and faults occur intermittently and are not always evident at the time of the inspection. Oil consumption cannot be measured during the inspection.
All vehicle road tests are subject to road and legal requirements and are conducted in the vicinity of the inspection site. VIP cannot advise you of any defect that is not evident at the time of the inspection, nor predict the serviceability of any component.
In no way shall VIP or any associated company or it’s agents and inspection officers be held liable or responsible for any claim, regardless of the nature. This report is NOT a recommendation that you purchase the fore-mentioned vehicle, this decision rests wholly and solely on YOU the buyer.
[9] Page 33 of the book of documents.
Some time prior to 14 June 2017, as the vehicle was located in Corlette in New South Wales, Mr Hodgson engaged VIP to conduct an inspection of the motor vehicle and to provide a report as to its condition.[10] That inspection was carried out on 14 June 2017. At the time of the inspection, the odometer of the motor vehicle was recorded as 57930.[11] Following the inspection, the inspector, Mr Bowen, prepared a Report entitled “Vehicle Inspection and Appraisal Report” dated 14 June 2017 (the Report) . The Report includes the PDS to which I have already referred.
[10] Paragraph 2 of the Reasons of the Magistrate delivered on 29 April 2021 (Reasons).
[11] Ibid. P 70 of the book of documents.
Part of the Report indicates that a road test was taken. The inspector marked that the clutch/gearshift (manual) was in good condition.[12]
[12] Ibid at 78.
The Magistrate found that based in part on the Report, Mr Hodgson decided to purchase the vehicle.[13] That is a logical conclusion and I find no reason to disagree with that finding.
[13] Reasons at [4].
On 19 June 2017, Mr Hodgson entered into a contract with VIP to transport the vehicle to South Australia. The amount payable by Mr Hodgson was in the sum of $1325 and included $295 for final inspection, bill of sale, collect documentation, handover payment and collection of the vehicle.[14]
[14] Page 33 of the book of documents.
On 3 July 2017, the vehicle was delivered to Mr Hodgson. At the time that it was picked up for delivery the odometer recorded that the vehicle had travelled 57,936 km (the further 6 km from the time of inspection was the distance travelled on that inspection).[15]
[15] Reasons at [5].
When the vehicle was delivered to Mr Hodgson on 3 July 2017, he drove it a few metres from his driveway to his carport.[16] The following day he drove the motor vehicle to Regency Park for a motor vehicle inspection and registration and then later to remove some rear tinting.[17] During the course of driving the vehicle to Regency Park, the Magistrate found Mr Hodgson observed that the clutch was clearly slipping. Mr Hodgson made arrangements to have the vehicle inspected by a specialist repairer, Adelaide Motor Masters Pty Ltd.[18] Again, I find no reason as to disturb or disagree with that finding. Mr Hodgson was accepted by the Magistrate as an honest and credible witness.
[16] Reasons at [6].
[17] Reasons at [8].
[18] Reasons at [8].
The evidence about the clutch slipping is confirmed by the arranging for the clutch to be inspected. Adelaide Motor Masters provided a report as to the condition of the clutch and some other alleged defects that are not relevant to this review.[19] In relation to the clutch Adelaide Motor Masters recorded that it was slipping and required immediate replacement.[20]
[19] Reasons at [9]; p 85-87 of the book of documents.
[20] Page 86 of the book of documents.
Adelaide Motor Masters also provided a report as to how a failed or failing clutch may be discovered.[21] The author of that report, a Mr Langton, the director and head mechanic of Adelaide Motor Masters, stated that he road tested the vehicle and found that while driving, the clutch pedal was at the very top of its travel which was a positive indication of excessive wear of the clutch and demonstrated that replacement of the clutch was required. He said that this was confirmed by a full safety check at the workshop.
[21] Page 69 of the book of documents.
In the report, Mr Langton further stated that there were a number of other ways to diagnose a failed or failing clutch. One of these ways was to put the vehicle in a higher gear and attempt to take off. If the clutch is working well, the vehicle will stall. In relation to this vehicle, Mr Langton found that the vehicle started in every gear and it took off rolling. A third way to test the clutch was to maintain a constant speed and then try to accelerate. A failed clutch will cause the engine to rev higher and not gain speed. The vehicle performed in that way upon his inspection.
Accordingly, I consider that there were proper grounds for the Magistrate to be satisfied, on the balance of probabilities, that if the clutch had been properly tested, evidence of extreme wear would have been apparent.[22] The evidence indicated that at the time Mr Hodgson first drove the vehicle to Regency Park on 4 July 2017 (and observed the clutch slipping), the vehicle could not have travelled more than a small number of kilometres following the time of inspection on 14 June 2017. Mr Hodgson gave evidence (and took a photograph verifying his evidence) that the odometer recording on 12 July 2017 was 58,040. By that time, he had driven the vehicle to Regency Park and to a car detailer. I agree with the Magistrate’s conclusion that the wear on the clutch would have been evident upon a proper inspection and therefore the inspector was negligent.[23] It is apparent that the Magistrate also found that Mr Hodgson was entitled to damages for misrepresentation.[24]
[22] Reasons at [11].
[23] Reasons at [19].
[24] Reasons at [26].
Determination of the Review
In my view, the Magistrate’s findings were in accordance with the evidence before him. In my view, they are supported by the documentary evidence or are natural inferences arising from that evidence. I also consider his findings correct as a matter of law.
I will now consider the complaints and points of law raised by VIP in its Notice of Review.
First, VIP complained that it provided no warranty as to the accuracy of its vehicle inspection and the Report. Exclusion clauses are to be construed according to the ordinary rules of construction and if the clause, in its ordinary meaning, excludes both negligence and some other form of liability, that will be its effect.[25] VIP submitted that the Report was based on a visual inspection and did not cover latent issues under the wording used in the PDS. I agree that such an exclusion exists in relation to any visual inspection taken by VIP. However, the wording of the PDS excluding liability for latent damage, upon its proper construction, applies to visual inspection and does not apply to vehicle road tests. In relation to vehicle road tests, the PDS states that VIP cannot advise of any defect that is not evident at the time of the inspection, nor predict the serviceability of any component. In my opinion, the defect in the clutch was evident at the time of the vehicle road test. In my opinion, the wording of any exclusion in the PDS is limited to visual inspections and does not, as a matter of construction, apply to the road tests. The claim for negligence in the conduct of the road test is therefore not excluded.
[25] Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82; (1986) 161 CLR 500.
Further, in my view the statement in the Report that the clutch was in a good condition was misleading and deceptive within the meaning of s 18 of the Australian Consumer Law. The Magistrate found (a conclusion with which I agree) that the clutch was not in good condition and in fact needed replacing and therefore the Report was misleading. An exclusion clause cannot operate as a matter of law to exclude liability for misleading and deceptive conduct or prevent the granting of appropriate relief.[26] At most it can erase the effect of the conduct as misleading.
[26] Bowler & Anor v Hilda & Ors (1998) 80 FCR 191; Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592.
Exclusion clauses and disclaimers are part of the overall factual matrix and therefore must, in accordance with the principle laid down by the High Court in Butcher v Lachlan Elder Realty[27] be considered as part of the conduct as a whole in determining whether the conduct was misleading or deceptive.
[27] (2004) 218 CLR 592.
Thus, in Benlist Pty Ltd v Olivetti Australia Pty Ltd the Court held:[28]
disclaimers to be effective must actually have the effect of erasing what is misleading or deceptive in the conduct. In this event, the disclaimer is effective not by any force of its own, but because it actually modifies the conduct.
[28] [1990] ATPR 41-043.
In my view, the PDS does not erase the effect of the misleading conduct. The exemption referred to in that statement relates to the visual inspection and not the vehicle road test.
The second ground relied upon by VIP in the Notice of Review was that Mr Hodgson made the decision to purchase the vehicle based on his own judgment. VIP submitted that this conclusion was confirmed by the Bill of Sale. Causation is a question of fact. The fact of the statement made by Mr Hodgson in the Bill of Sale is a relevant piece of evidence, but it is not determinative. The fact that Mr Hodgson may have signed off on the vehicle upon delivery as to its condition likewise can only be a piece of evidence. A contractual disclaimer of reliance will ordinarily be considered in the context of causation.[29] In Campbell v Backoffice, French CJ held:[30]
that declaration may, according to the circumstances, be evidence of non-reliance and of the want of a causal link between the impugned conduct and the loss or damage flowing from entry into the contract. In many cases, such a provision will not be taken to evidence a break in the causal link between misleading or deceptive conduct and loss. The person making the declaration may nevertheless be found to have been actuated by the misrepresentations into entering the contract. The question is not one of law, but of fact.
[29] Ibid at [31].
[30] [2009] HCA 25; (2009) 238 CLR 304 at [31].
VIP’s contentions do not overcome, in my view, the natural inference to be drawn from the obtaining and receipt of the Report by Mr Hodgson. I consider that the Magistrate was correct in concluding that Mr Hodgson relied upon the Report in deciding to purchase the vehicle. Mr Hodgson lived in South Australia and the vehicle was in New South Wales. He therefore commissioned and relied upon the inspection and the Report. It is a matter of common sense that Mr Hodgson would not have bought the vehicle for the same price had he known that the clutch needed replacing.
Thirdly, VIP submitted that the Report accurately described the condition of the vehicle. In my opinion, the Magistrate was correct in finding that the clutch was not in a good condition contrary to what was stated in the Report and therefore the Report was not accurate. I consider that this finding comes from the evidence of Mr Hodgson that on the first occasion he drove the vehicle, he observed that the clutch was slipping. He then arranged for the vehicle to be inspected by Adelaide Road Masters who confirmed this diagnosis. In my view, it is a reasonable inference to make that if the vehicle was in that condition when it arrived in Adelaide, then it would have been in the same condition when it left Corlette and when it was inspected, given that the odometer provided evidence that any driving between these two times was minimal.
Fourthly, and related to the last ground of review, VIP submitted that the clutch did not show any defects on the inspection when it was checked. For the reasons that I have stated in relation to the previous ground, I consider that the evidence establishes that the vehicle was in the same condition when it arrived in Adelaide and was first driven by Mr Hodgson as it was when VIP conducted the inspection. For the reasons stated by Adelaide Road Masters, I consider that it would have been evident on the vehicle road test, had the appropriate tests been undertaken, that the clutch was not in a good condition and in fact needed replacing. I note that VIP did not call the inspector, Mr Bowen. There is no evidence therefore as to what tests he undertook on the vehicle during the inspection.
The fifth ground of review raised by VIP was that it was not known what happened to the clutch after the inspection, including when it was being transported. There is no evidence as to any mistreatment of the vehicle when it was being transported such that it would have caused damage to the vehicle. In my view, it is only speculation to submit that the vehicle was damaged whilst being transported. The evidence, which I have referred to above, suggests that the vehicle was in the same condition when it arrived in Adelaide as it was when it was inspected. I agree with the Magistrate’s conclusions on this issue.[31]
[31] Reasons at [15].
The sixth ground of review raised by VIP was that Mr Hodgson may have contributed to the faulty clutch by his own driving, including when the vehicle was being driven onto his own driveway. Again, there is no evidence to support this contention. It is contrary to the evidence of Mr Hodgson. There is no reason why Mr Hodgson would have driven the vehicle in such a way that caused damage to the clutch. There is no evidence that the clutch failed because of a single event rather than general wear and tear.
The seventh ground of review was that there was no basis for the finding of the Magistrate that the tyres were worn and it appeared that the vehicle had been driven quite hard at some stage.[32] The Magistrate relied on the photographs to reach this conclusion which he was entitled to do. However, I do not consider any finding made by the Magistrate on this issue led to any further finding regarding the condition of the clutch at the tim of inspection or at the time of delivery.
[32] Reasons at [10].
The eighth ground of review raised by VIP was that the report from Adelaide Road Masters does not state and cannot determine when the clutch failed. I agree that the report does not state when the clutch failed. However, that is not the relevant enquiry. The relevant enquiry is whether the clutch had failed or was failing at the time of inspection and whether that failure could be detected at the time. For the reasons that I have already stated, I consider that the defects in the clutch would have been evident upon inspection. It does not matter when the defects first arose.
The ninth ground of review raised by VIP was that there was no basis for the conclusion by the Magistrate that the clutch was 90% worn at the time of inspection. The Magistrate did not make a finding that the clutch was 90% worn at the time of testing. The finding of the Magistrate at paragraph [17] of the Reasons was that:
if the clutch was 90% worn at the time of the testing and if that had occurred on the 57,000 km that had been driven, that may well have not been detectable. The reality is that, after only 100 km of what I accept was gentle driving, an inspection of those two components indicated extreme wear.
At paragraph [25] of the Reasons the Magistrate again raised, as a hypothetical, the consequences of a finding of the clutch being 90% worn. The Magistrate stated at paragraph [25] “As I say, had the clutch been 90% worn, it would be difficult to argue that that amount of wear should have been detected by the inspector of the car. That kind of wear might be anticipated as a latent defect”. Again, the Magistrate made no finding that the clutch was 90% worn.
The tenth ground of review was that there were three parties who could possibly be to blame for the loss suffered by Mr Hodgson, namely VIP, CEVA Transport and Mr Hodgson himself and that in these circumstances, VIP should not bear responsibility for the loss. That submission is contrary to the findings of the Magistrate, with which I agree, that there was no evidence of any fault on the part of Mr Hodgson or CEVA Transport. Further, the conduct of VIP only has to be a cause of the loss or damage, it does not have to be the sole or even a necessary cause.[33]
[33] I & L Securites Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 201 CLR 109; Henville v Walker [2001] HCA 52; (2001) 206 CLR 459 at [14].
The eleventh ground of review concerned the quantum of the claim. VIP contended that the value of the motor vehicle at the time of inspection was more than the amount paid by Mr Hodgson and therefore there was no loss suffered by Mr Hodgson because of the defective clutch. There was no evidence produced by VIP in support of that contention. The Magistrate dealt with the question of value at paragraph [22] of his Reasons. The Magistrate held:
The detail available online is of course somewhat suspect and I did not find a car exactly like Mr Hodgson’s and of course, as Mr Vasilakis points out, the car is now three years older. However, speaking in general terms, there was nothing to suggest that the price paid by Mr Hodgson was particularly cheap. Furthermore, Mr Hodgson told me that the car was advertised on carsales.com and when he tried to negotiation [sic] with the owner of the car, the owner refused to negotiate down. I am not satisfied that the car was worth more than Mr Hodgson paid”.
I consider that the best evidence before the Court as to the value of the vehicle at the time was the price paid by Mr Hodgson less the costs of replacing the clutch. Mr Hodgson negotiated with the vendor at arms length on the basis of the condition of the car as represented in the Report. The vehicle was advertised on a popular and well recognised car sales website. In my opinion, on the evidence before him, the Magistrate was correct in holding that 50% of the cost of replacement of the clutch represented the amount the applicant paid in excess of the vehicle’s true value or the proper measure of damages for misrepresentation. The Magistrate was entitled to take a broad-brush approach to the issue of the quantum of damages, although I do not consider that the online investigation by the Magistrate was appropriate.
I therefore do not find that any of VIP’s grounds of Review are made out.
Conclusion
For the reasons that I have expressed, I dismiss the application for review and affirm the judgment of the Magistrate.
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