Ashe v Vehicle Auctions Australia Pty Ltd [2020] QCAT 500

TRADE AND COMMERCE - COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION - CONSUMER PROTECTION - GUARANTEES, CONDITIONS AND WARRANTIES IN CONSUMER TRANSACTIONS - GUARANTEES, CONDITIONS AND WARRANTIES - whether motor vehicle of acceptable quality - whether vehicle corresponded with description - whether failure to comply with consumer guarantees a major failure - whether goods rejected during the rejection period - whether consumer entitled to refund - whether consumer entitled to damages

Competition and Consumer Act 2010 (Cth), Schedule 2 - Australian Consumer Law s 54, s 259, s 260, s 262, s 263

Fair Trading Act 1989 (Qld), s 50A

Haisman v Drive (Aust) Pty Ltd [2020] QCAT 44

Medtel Pty Ltd v Courtney [2003] FCAFC 151; (2003) 130 FCR 182

Nesbit v Porter [2000] NZCA 288; [2000] 2 NZLR 465

• [1] On 22 November 2019, Mr Ashe ('the applicant') filed an Application - Motor Vehicle Dispute with the Tribunal. The respondent is Vehicle Auctions Australia Pty Ltd ('the respondent').
• [2] The applicant is the owner of a 2006 Toyota Landcruiser ('the motor vehicle').
• [3] The applicant purchased the motor vehicle from the respondent on 18 September 2019 for $28,442.50.
• [4] The applicant seeks relief under the Australian Consumer Law, which is Schedule 2 to the Competition and Consumer Act 2010 (Cth). The relief sought by the applicant is a refund plus damages.
• [5] Section 50A of the Fair Trading Act 1989 (Qld) vests the Tribunal with jurisdiction in relation to motor vehicles in respect of certain actions under the Australian Consumer Law.

• [6] Section 54(1) of the Australian Consumer Law provides that, where a person supplies goods in trade or commerce (other than by way of auction), the goods are guaranteed to be of 'acceptable quality'.
• [7] The time at which goods are to be of acceptable quality is the time at which the goods are supplied to the consumer: Medtel Pty Ltd v Courtney [2003] FCAFC 151; (2003) 130 FCR 182 at [64] and [70]. However, information available after the time of supply may be taken into account in deciding whether the goods were of acceptable quality at the time of supply.
• [8] Sections 54(2) and (3) of the Australian Consumer Law define acceptable quality as follows:

(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.

• [9] Section 56 of the Australian Consumer Law imposes a guarantee of correspondence with description. It relevantly provides:

(1) If:

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

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

there is a guarantee that the goods correspond with the description.

• [10] The evidence before me is that the applicant purchased the motor vehicle from the respondent prior to auction. Accordingly, the exceptions to the consumer guarantees relating to supply by way of sale by auctions do not apply in the present case.
• [11] The respondent provided the applicant with a condition report. The condition report lists the following features:

Airbag Dual, Power Steer, Power Windows, ABS, CD player, Bull Bar, 4x4, diesel, side steps.

***REGO & RWC***

• [12] RWC is a commonly used abbreviation for roadworthy certificate.
• [13] It is not in dispute that the motor vehicle does not have dual airbags, power windows, ABS or a CD player. At the hearing, the respondent's position was that the motor vehicle was sold without a roadworthy certificate. Accordingly, I find that the respondent failed to comply with the guarantee of correspondence with description.
• [14] The condition report indicated that the motor vehicle was graded D:

D - Vehicles over 160,000 Km's or over 10 years

These are our lower grade vehicles. Due to the high age and km's [sic] the vehicle may require mechanical work and may contain panel damage, rust & wearing.

• [15] The condition report also contained the following notes:

Vehicle: May require detail

Under body: Minor dents, chips & scratches, standard wear for ute

Underbody: Minor Dent on chassis

Door: Crack around key barrel

Side mirror: crack around mount

Drivers door: Minor damage

• [16] The Form 12 signed by the applicant noted that it does not have a statutory warranty, as it was a commercial vehicle.
• [17] The applicant arranged for the motor vehicle to be inspected by Benjamin Bowman of Crows Nest Motors on 20 September 2019. Mr Bowman provided the following list of faults:
  • LHS mid chassis rail cracked
  • RHS mid chassis rail dented
  • LHS headlight wires exposed
  • Broken relays
  • Fan belt and alternator belt - both require replacing
  • Alternator corroded
  • Brake/clutch fluid requires replacing
  • UHF bracket weak
  • Major rust RHS and LHS door sill
  • Lower RHS sill cracked
  • RHS door cracked above handle
  • Cross member rust
  • Extensive corrosion transmission
  • Sway bar bushes worn
  • Excessive front prop shaft play
  • LHS swivel pin major leak
  • Steering track rod bent
  • Transfer case leaking
  • Paint damage to bonnet
  • Transmission case leaking
  • Muffler mount broken
  • Aircon high service port cap missing
  • RHS seat belt trim missing
  • Tyre brace wrong size
  • Fuel gauge faulty
  • Holes in cabin
• [18] I accept Mr Bowman's evidence. Mr Bowman inspected the motor vehicle two days after the applicant took delivery of it, and I am prepared to infer that the report reflects the condition of the vehicle at the time of delivery.
• [19] At the hearing, the respondent raised the issue that the only report before the Tribunal in relation to the condition of the motor vehicle was from the applicant's expert. I note that paragraph 13 of QCAT Practice Direction No. 2 of 2019: Motor Vehicle List states:

[T]he applicant may be required to give access to the motor vehicle (the subject of the application) to an expert engaged by the respondent.

• [20] No such application was made by the respondent.
• [21] In its written evidence filed with the Tribunal, the respondent conceded that the motor vehicle is 'clearly "unroadworthy"'.
• [22] I have taken into account the representations made by the respondent about the motor vehicle. In particular, I have taken into account the information provided to the applicant by the respondent in the condition report, namely that the motor vehicle was described as class D (based on its age and odometer reading) and that a number of faults were noted. I have also taken into account that the motor vehicle was sold without a statutory warranty. Nevertheless, even taking these matters into account, I find that a reasonable consumer fully acquainted with the state of the motor vehicle at the time of purchase, particularly having regard to:

(a) the representation that the motor vehicle had a roadworthy certificate when apparently it did not;

(b) the presence of multiple additional faults which resulted in the motor vehicle being unroadworthy; and

would not regard the motor vehicle as free from defects and/or durable. Accordingly, I find that the respondent failed to comply with the guarantee of acceptable quality.

• [23] The remedy available to the consumer against the supplier depends in the first instance on whether the failure is a 'major failure'. That term is defined in s 260 of the Australian Consumer Law to relevantly mean:

(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.

(a) the absence of a number of identified features, including the absence of a roadworthy certificate; and

(b) the presence of multiple faults resulting in the motor vehicle being unroadworthy,

are such that a reasonable consumer fully acquainted with the nature and extent of the failure, would not have acquired the motor vehicle.

• [25] In order to obtain a refund, the consumer is required to reject within the 'rejection period'. That term is defined in s 262(2) of the Australian Consumer Law to mean:

(2) The rejection period for goods 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.

• [26] In Nesbit v Porter [2000] NZCA 288; [2000] 2 NZLR 465 at [39], the New Zealand Court of Appeal held that the rejection period was one that:

...suffices to enable the consumer to become fully acquainted with the nature of the defect, which, where the cause of breakage or malfunction is not apparent, the consumer can be expected to do by taking the goods to someone, usually or preferably the supplier, for inspection. In this context, therefore, a defect is not 'apparent' until its cause has been identified and the buyer knows what has to be done to fix it, and what that will cost; in other words, until the buyer is in a position to determine whether the defect is substantial.

• [27] The applicant sought a refund by email on 1 October 2019. This was shortly after receiving the report from Mr Bowman. In these circumstances, I am satisfied that the applicant rejected the motor vehicle within the rejection period.
• [28] In Haisman v Drive (Aust) Pty Ltd [2020] QCAT 44 at [24], I found that the Tribunal has jurisdiction to make an order requiring the supplier to pay to the consumer a stated amount of money, namely the amount of the refund payable under s 263(4)(a). In this case, the applicant has notified the respondent that the goods have been rejected in accordance with s 263(1) of the Australian Consumer Law. I will give effect to the requirement in s 263(2) that the goods be returned by so ordering. Upon the return of the motor vehicle, the applicant will be entitled to a refund pursuant to s 263(4).

• [29] The Tribunal is vested with jurisdiction in respect of actions under s 259(4) of the Australian Consumer Law, which provides:

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.

• [30] The applicant has claimed the amount of $3,750, being for the supply and installation of a new tray for the motor vehicle. As the tray was sourced and installation arranged by the respondent prior to delivery of the motor vehicle, I consider that this expense was reasonably foreseeable, and is recoverable.
• [31] The applicant has also claimed the costs of $600, being the joining fee for the respondent. The evidence before me indicates that, following payment of the joining fee, the respondent offered the applicant a number of other vehicles which he declined to purchase. Accordingly, it does not appear that the joining fee was specific to the motor vehicle the subject of the proceedings, and I do not consider it is recoverable in these proceedings.
• [32] The applicant has provided an invoice from Crows Nest Motors for the costs of inspecting the motor vehicle. However, the applicant has not provided evidence that this invoice was paid. In the absence of such evidence, the applicant is not entitled to recover damages in relation to this item.
• [33] Conversely, the applicant has claimed an amount of $367 paid to Jaykays Auto Electric. While the applicant has provided a bank statement showing a payment was made, he has not provided an invoice or other documentation from Jaykays Auto Electric as to what the payment was for. In the absence of such evidence, the applicant is not entitled to recover damages in relation to this item.
• [34] The applicant has also claimed the amount of $1,172.25, being for wear and tear on his personal vehicle which he had to use for his business. This amount relates to two invoices from Crows Nest Motors for servicing of his personal vehicle. However, as noted above, the applicant has not provided evidence that these invoices were paid. In the absence of such evidence, the applicant is not entitled to recover damages in relation to this item. Further, and in any event, while it may have been foreseeable that the applicant would have to use another vehicle, it does not seem to me that the servicing expenses of the alternative vehicle are necessarily an appropriate quantification of damages.

• [35] The orders of the Tribunal are:
  1. The applicant is required to return the motor vehicle the subject of these proceedings to the respondent within 7 days of the date of these orders.
  2. The respondent is required to pay to the applicant the amount of $32,192.50 within 28 days of the date of these orders.