Atkins v Future Wheels Pty Ltd [2024] QCAT 233

Merck Sharp & Dohme (Australia) Pty Ltd v Peterson [2011] FCAFC 128; [2011] 196 FCR 145

• [1] Mr Edward Atkins applies to this Tribunal for relief pursuant its jurisdiction under section 50A of the Fair Trading Act 1984 (Qld) ('FTA'). Relief is sought against Future Wheels Pty Ltd ('Future Wheels') following its sale of a motor vehicle to Mr Atkins in or about March 2023.
• [2] At the hearing of this matter, Mr Atkins appeared on his own behalf and Mr Ben Fletcher appeared for Future Wheels. Mr Fletcher said that Future Wheels was no longer trading but was not in liquidation.

• [3] Mr Atkins gave evidence that he entered into a contract with Future Wheels for the purchase of a 2016 Holden Colorado, Queensland Registration Number 283GQ4, on 28 March 2023 ('the Colorado'). The contract is Exhibit 2. The purchase price was $32,670 including GST. The contract says that the odometer reading was then 127,254 km. He did not sign the contract and a copy was not provided to him until 24 April 2023, however, a tax invoice dated 30 March 2023 was provided and he made payment on 31 March 2023. The tax invoice is Exhibit 4.
• [4] The Colorado was collected by Mr Atkins on 7 April 2023 and at about this time he was provided with a copy of a roadworthy certificate by Future Wheels. It is Exhibit 5. That roadworthy certificate states that an inspection was carried out by Mr Nicholas Bray of "Garage 84", Unit 18, 225 Brisbane Road, Biggera Waters on 4 April 2023 when the Colorado's odometer reading was then 127,435 km, and that the car passed every inspection item.
• [5] Mr Atkins then drove the car from Future Wheels' premises at Unit 12, 225 Brisbane Road, Biggera Waters to his home in Mission Beach. During the drive he noticed an oil leak coming from the engine bay. On 19 April 2023, his local mechanic, NQP Mechanical Pty Ltd ('NQP Mechanical'), investigated the oil leak and informed him that the vehicle was defective.
• [6] Mr Atkins tendered a tax invoice of NQP Mechanical dated 19 April 2023. It is Exhibit 14. It states to the effect that the Colorado has no high beam bulbs, and oil under the rear chassis and tray sprayed from leaking differential seals in very bad condition. The front of the engine has oil coming from behind the front engine cover due to possible problems with the timing belt seals. The front brakes need new pads and are not releasing. Work is needed on the front differential, including replacing the sway bar which is freely sliding from side to side. The transfer case has a leaking seal. NQP Mechanical concluded that the car was unroadworthy, unsafe, and should not be driven at all. Its tax invoice stated to the effect that its mechanics would not take the car for a road test because it was unsafe.
• [7] From 26 April 2023, Mr Atkins and Future Wheels entered into correspondence about the defects. Persons associated with Future Wheels arranged for a second inspection of the Colorado by Savage Mechanical on 27 April 2023. Following this, the parties entered into further correspondence about the outcome of Savage Mechanical's inspection. Future Wheels refused to provide Mr Atkins with a copy of Savage Mechanical's report about the state of the vehicle despite numerous requests.
• [8] Instead, Savage Mechanical contacted Mr Atkins and said that it had declined to quote on the repairs and had been told by Future Wheels to effectively withhold information from him about the defects. An email from Ms Cassandra Nucifora of Savage Mechanical to Mr Atkins dated 9 May 2023 was tendered as Exhibit 7. It states to the effect that she had dealings with "Ben" of Future Wheels, who was made aware of the repairs needed, and that Mr Atkins' safety was in danger. It further states to the effect that "Ben" initially told Savage Mechanical to ignore repairs to the brakes and Mr Atkins was not to be informed about the information in Savage Mechanical's report.
• [9] Eventually however, Mr Atkins obtained a copy of the report. It is Exhibit 8. Relevantly, amongst other things, it states that the Colorado is in a critical condition with defects caused by heavy corrosion to the rear brakes, which are a high risk. Parts of the frame are broken or missing and there are cracks in the gear box mount, and holes in the exhaust joint. There are leaking seals, and the chassis is full of silt or dirt. The car has a dented sump, the engine oil leaks, and there are problems in the front sway bar bushes, wheel bearings, and differential pinion seals. The windscreen washers are not working, the battery is unsecured and there are problems with the front brakes, including defective, worn front brake pads. The wheel bearings have play in them and towbar bolts are not fastened correctly. The chassis has severe rust throughout, and the vehicle had not been serviced for about 23,000 kilometres.
• [10] Future Wheels' refusal to provide a copy of Savage Mechanical's report then impeded an offer by Future Wheels to repair the defects. Mr Atkins' evidence was that he was concerned about the safety of the vehicle and wished to see the report before he agreed to have the vehicle repaired. He said to the effect that he needed to understand what all the defects were before he could agree to the repairs to be carried out.
• [11] On 3 May 2023, Mr Atkins gave written notice to Future Wheels, amongst other things, that he was rejecting the Colorado and requested a full refund of the purchase price. The notice is Exhibit 9.
• [12] Mr Atkins later obtained his own a roadworthy inspection report on 16 May 2023. It is Exhibit 10. The report was prepared by Bramston Beach Automotive, which also prepared a tax invoice dated 16 May 2023 setting out details of the defects in the Colorado. It is Exhibit 11. At that time, the odometer reading was 129,835 km. The documents show that the car failed the roadworthy inspection on six of the 14 assessment points. Defects were detected in the seats and restraints, lights, electrical components, windscreen and glazing, body, chassis, and frame, steering and suspension, engine driveline and emissions system. Seatbelts are unsecure, as is the battery and the car is not fitted with a proper windscreen washer system. A frame component is damaged to the point where the chassis is weakened and a failure of it is likely to occur. Mudguards are not fitted properly, and suspension components are worn beyond the manufacturer's specifications. Sway bar components and wheel bearings are defective. Engine components are leaking oil out onto the roadway and the exhaust system is defective.
• [13] Mr Atkins' evidence was that he has not been able to drive the vehicle since it was inspected by NQP Mechanical, other than for the purposes of obtaining inspection reports. It is now stored at his home. Exhibit 12 is a photo of the odometer reading 129,837 km on 22 April 2024. He has been forced to hire or borrow alternative vehicles. He tendered a tax invoice dated 20 May 2024 from "Vital Flow Chiropractic Studio" of Sadadeen, Northern Territory in the sum of $5,610, and said this was for the cost of hiring an alternative vehicle. It is Exhibit 13.

• [14] Mr Fletcher elected not to offer any evidence in chief. He said that he essentially relied on documents that Mr Atkins was tendering. He also elected to perform limited cross examination of Mr Atkins only.
• [15] Mr Atkins made several material witnesses available for cross examination by Mr Fletcher. They were Mr Neil Downing of NQP Mechanical, Ms Nucifora of Savage Mechanical and Mr Ken Keevan of Bramston Beach Automotive. However, Mr Fletcher did not require those witnesses for cross examination. The importance of his decision not to cross examine was explained to him and I am satisfied that he understood.
• [16] Mr Fletcher put to Mr Atkins that he had the Colorado inspected and test driven prior to sale and the defects ought to have been apparent at that time. Mr Atkins said in response to the effect that his father had performed that inspection, that his father was not a qualified mechanic, and the nature of the inspection was a "look over" the car to make sure it fit the specifications of what Mr Atkins wanted, namely, a four-wheel to take camping. He said that the inspection would not have uncovered defects in areas such as the seat belts, brake lines and exhaust system, despite a test drive.
• [17] Mr Fletcher also put to Mr Atkins that he could not produce any contract supporting the tax invoice from Vital Flow Chiropractic Studio. In response, Mr Atkins said to the effect that the hire vehicle was owned by a family member and there is an oral agreement where he will pay the tax invoice if he recovers an amount in this proceeding.

• [18] Mr Atkins claims relief under section 259 of the Australian Consumer Law (Queensland) ('ACL') for a major failure to comply with the guarantee contained in section 54 of the ACL. His written statement, which is Exhibit 1, initially sought relief pursuant to other causes of action, but he did not press these at the hearing. He seeks an order that Future Wheels pay him an amount of money, in the form of a refund of the purchase price of the Colorado plus out of pocket costs relating to investigating the defects in the car plus the hire car expenses.
• [19] Section 54(1) of the ACL provides that if a person supplies, in trade or commerce, goods to a consumer and the supply does not occur by way of sale by auction, there is a guarantee that the goods are of acceptable quality ('the guarantee').
• [20] What constitutes "acceptable quality" is set out in section 54(2) of the ACL. It provides that 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 certain matters.

• [21] According to section 54(3) of the ACL, the matters to which regard must be had 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 goods.

• [22] Section 54(7) of the ACL provides that goods do not fail to be of acceptable quality if:

(a) the consumer acquiring the goods examines them before the consumer agrees to the supply of the goods; and

(b) the examination ought reasonably to have revealed that the goods were not of acceptable quality.

• [23] As to what constitutes a major failure to comply with the guarantee, section 260(1) of the ACL says that a major failure occurs where, amongst other things, the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure. If the failure is major, then pursuant to s 259(3)(a), the consumer may notify the supplier that the consumer rejects the goods.[1]
• [24] Section 259(4) of the ACL also provides for the consumer to recover damages for loss or damage suffered because of the failure to comply if it was reasonably foreseeable that the consumer would suffer such loss or damage as the result of the failure. Pursuant to section 259(6), the recovery of such loss or damage is in addition to rights the consumer may have in the event of a major failure, which are discussed above.
• [25] It may be seen by the wording of these provisions that the issues of whether the goods were of acceptable quality, or whether the goods would not have been acquired, are to be determined objectively. The time at which to determine whether goods are of acceptable quality is when the goods are supplied.[2]
• [26] The consequences that flow from a rejection of the goods are set out in section 263 of the ACL. Relevantly, the consumer must return the goods unless they have already been returned or cannot be returned without significant cost to the consumer because of the nature of the failure to comply with the guarantee to which the rejection relates. In that case, the supplier must collect the goods at the supplier's expense within a reasonable time. Further, the supplier must, in accordance with the consumer's election to reject the goods, refund any money paid by the consumer for the goods or replace them with goods of the same type and of similar value if reasonably available to the supplier. If the property in the rejected goods has passed to the consumer before the rejection was notified, the property in the goods revests in the supplier on the notification of the rejection.

• [27] This Tribunal has jurisdiction under section 50A of the FTA to make an order of the nature sought by Mr Atkins.[3] The Colorado is a form of goods to which the FTA and the ACL applies, and the contract for its sale was between persons carrying on business, or ordinarily resident in, Queensland.[4] The sale was not by auction. The transaction was in trade or commerce, and Mr Atkins was a consumer and Future Wheels was a supplier for the purposes of the ACL.
• [28] I find that there has been a failure to comply with the guarantee. There is evidence from three separate mechanics to similar effect, namely, that the Colorado is not free from defects or safe. The mechanics include Savage Mechanical, which was engaged by persons associated with Future Wheels. I make this finding having regard to what a reasonable consumer would regard as acceptable having regard to:

(a) the fact that the goods are a motor vehicle, which needs to be in a condition suitable to be safely and lawfully driven on Queensland roads;

(b) the purchase price of $32,670, which is an amount that a reasonable consumer would regard as significant expenditure;

(c) the roadworthy certificate given by Future Wheels, which represented that, although what was being sold was a used car, it was one that passed every item of inspection that it was required to pass in order to be deemed roadworthy.

• [29] It is relevant that, at the hearing, Future Wheels did not give or call any evidence to dispute that the Colorado was defective. Mr Fletcher submitted that Future Wheels remained willing to repair the defects. He put to Mr Atkins that Mr Atkins' father ought to have detected the defects when he inspected the car before it was bought.
• [30] I do not find that the inspection by Mr Atkins' father ought reasonably to have revealed that the Colorado was not of acceptable quality. Such a finding is not supported by the evidence of the mechanics about the extent and nature of the defects (including defects in the chassis, seals, seatbelts, exhaust, and brakes), combined with Mr Atkins' evidence that his father's inspection was merely a look over the car in circumstances where he is not a qualified mechanic.
• [31] The nature and extent of the defects in the goods also supports a finding that Future Wheels' failure to comply with the guarantee is major. The Colorado would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure because the defects here render the car so unsafe that the mechanics at NQP Mechanical refused to even test drive the car.
• [32] Mr Atkins has given Future Wheels notice that he rejects the car as required. The notice was given on 3 May 2023 where he was first notified of the defects only 14 days earlier on 19 April 2023, and discussions between the parties about fixing the defects failed on about 2 May 2023. This is a reasonable period for the rejection to have occurred.[5]
• [33] While it is true that Future Wheels, through Mr Fletcher, repeatedly said it would fix the defects, Mr Atkins finds this unacceptable due to the dealings between the parties after the defects were first revealed to Mr Atkins. Part of those dealings involved Mr Atkins' conversations with Mr Nucifora of Savage Mechanical, and it is significant that Mr Fletcher did not require Ms Nucifora for cross examination. Mr Atkins insisted on asserting his rights under the ACL.
• [34] Having found that there has been a major failure to comply with the guarantee, it is appropriate for Future Wheels to refund the money paid by Mr Atkins. Mr Fletcher did not submit that the alternative remedy of replacing the goods ought to apply. His evidence was that Future Wheels is no longer trading so there is no reason to find that goods of the same type and similar value are available to it anyway.
• [35] I will order Future Wheels to refund the $32,670 to Mr Atkins. I will also order Future Wheels to pay Mr Atkins for the cost of the inspection by NQP Mechanical in the sum of $512.05 and the cost of the inspection by Bramston Beach Automotive in the sum of $198. His evidence was that he has already paid these amounts. In my view, the costs of the inspections are a form of loss damage suffered by Mr Atkins because of the failure to comply with the guarantee, and it is reasonably foreseeable for such costs to be suffered as a result of the failure.
• [36] The above amounts total $33,380.05.
• [37] I will not order Future Wheels to pay Mr Atkins for the cost of a hire car pursuant to the tax invoice of Vital Flow Chiropractic Studio. On the evidence, I am not satisfied that there is a legally binding contract underpinning the tax invoice that obliges Mr Atkins to pay the $5,610 stated in it.
• [38] A question arises as to what is to happen to the Colorado. I note that, pursuant to section 50A of the FTA, this Tribunal also has jurisdiction to make orders requiring a party to return goods that relate to the claim in the party's possession or control to a stated person. However, there does not appear to be any jurisdiction to order the goods to be collected from the party in possession.
• [39] Here, section 263(6) of the ACL has the consequence that the property in the Colorado has revested in Future Wheels. Ordinarily, section 263(2) of the ACL would oblige Mr Atkins to return the Colorado to Future Wheels, but Mr Atkins lives in North Queensland and Future Wheels is situated in the Gold Coast area. In the circumstances, I find that Mr Atkins is relieved of that obligation because the Colorado cannot be returned, removed, or transported without significant cost to him, where the car is unsafe and unroadworthy and cannot be driven on roads due to the defects that give rise to the failure to comply with the guarantee.
• [40] This means that, by operation of section 263(3) of the ACL, Future Wheels is obliged to collect the car at its expense within a reasonable time, but as I have said, section 50A of the FTA does not provide jurisdiction for me to make that order. Of course, Future Wheels may decide to collect the car from Mr Atkins at its expense without being ordered to do so, but that is a matter for it.

• [41] I make the following orders:
  1. The Respondent must pay to the Applicant the sum of $33,380.05.

[1] Subject to restrictions in ACL s 262 that are not relevant here.

[2] Merck Sharp & Dohme (Australia) Pty Ltd v Peterson [2011] FCAFC 128; [2011] 196 FCR 145 at [180] per The Court.

[3] See also Fair Trading Act 1984 (Qld) s 16.

[4] Motor Dealers and Chattel Auctioneers Act 2014 (Qld) s 12(1)(a); Fair Trading Act 1984 (Qld) s 20.