Bennett v Chequered Flag Motors Pty Ltd (Civil Claims) [2017] VCAT 1671

1. The name of the applicant is amended to Vanessa Bennett. The principal registrar is directed to amend the register accordingly.
2. By 30 November 2017, Jaguar Land Rover Australia Pty Ltd (ACN 004 352 238), at its expense, must collect the vehicle (the subject of this proceeding) and carry out any and all necessary works to replace the engine with a new engine.
3. On or before 16 October 2017, Jaguar Land Rover Australia Pty Ltd (ACN 004 352 238) must provide, at its expense, a loan vehicle to Vanessa Bennett for the period of time until the vehicle (the subject of the dispute) is repaired and returned to Vanessa Bennett.

1. If Jaguar Land Rover Australia Pty Ltd (ACN 004 352 238) does not comply with order 2 or 3 above, Vanessa Bennett may renew this proceeding by writing to the principal registrar no later than 15 December 2017, briefly outlining the non-compliance and requesting the proceeding be listed for further hearing. Any further hearing is to be listed before Member K. Campana, if available.
2. Jaguar Land Rover Australia Pty Ltd (ACN 004 352 238) must pay Vanessa Bennett the sum of $15,445.68.
3. Jaguar Land Rover Australia Pty Ltd (ACN 004 352 238) must pay Vanessa Bennett costs in the amount of $1,455.30 (which includes the application fee of $575.30).
4. The claim against Chequered Flag Motors Pty Ltd (ACN 007 047 305) trading as Lance Dixon, is dismissed.

1. Three years after buying what was effectively a brand new vehicle, Vanessa Bennett is using a relative's car, after the failure of her Jaguar engine.
2. Faced with a quote of $37,000.00 for a new engine, Mrs Bennett seeks orders that Jaguar Land Rover Australia Pty Ltd (ACN 004 352 238) ("the Supplier") carry out the works to replace the engine at its expense.
3. Mrs Bennett also seeks compensation for damages arising from the failure of the engine and the costs incurred of coming to the Tribunal.
4. Chequered Flag Motors Pty Ltd (ACN 007 047 305) trading as Lance Dixon ("the Dealer") took no part in the hearing.
5. The Tribunal must determine -

1. Mrs Bennett, purchased an ex-demo model Jaguar XF sedan for $88,500 on 13 February 2013.[1]
2. Almost a year later, with the odometer on 9,132 kilometres, Mrs Bennett rang the Dealer and advised the vehicle had a strange sound on take-off. She described the sound to the technician on the phone and booked it in to be checked. Mr Bennett then took the vehicle to Doncaster Jaguar on 23 January 2014, where a road test of the vehicle was carried out for a "belt slipping noise on take-off".[2] Mr and Mrs Bennett both say they did not describe the noise as "a belt slipping". Mrs Bennett says it was a rattling sound on take-off.
3. The Service Tax Invoice details the works carried out -

Road tested vehicle - no noise evident. Inspected fan belts and engine fittings - all ok. Unable to fault at time of testing. Customer to monitor, if fault persists customer demonstration will be required.

Tested operation - could not fault at time of testing. Checked faults - none logged.

Carried out XF 2.0L petrol 12 month/16,000km "A" service as per manufacturers specification.[3]

1. Neither the Bennetts, or the Dealer, were able to recreate the noise complained of.
2. Then on 2 May 2016, Mrs Bennett says she was in the Yarra Valley when she started the vehicle and the whole car started shaking. She says she turned it off straight away and called the Dealer. She described what had happened and was advised it was ok to drive it home. She says she then drove in the "limp home" mode, with the vehicle not reaching any more than 80 kilometres per hour.
3. Mr Bennett says he took the vehicle into the Dealer and dropped it off on 10 May 2016 and was given a loan car.
4. A Service Tax Invoice dated 17 June 2016 described the works undertaken on the vehicle -

Inspected engine light on concern, found misfire within engine. Completed compression test of engine cylinders and found number 1 had reduced compression of 45PSI. Remaining cylinder have 170PSI compression. Carried out leak down test and found leakage through piston and piston ring area.

Requires replacement of engine due to internal damage.

Completed formal goodwill request to Jaguar Australia due to vehicle warranty expiring on 25/12/15, submitted above report and service history.

Goodwill requested rejected based on insufficient justification for goodwill.

JLRA refused goodwill CRC case number 13804088. Towed vehicle back to customer as goodwill from Lance. No charge on cost of diagnosis.

Cost of replacing engine with new assembly approximately $37,500 inc GST.

Customer requested report, contact Jaguar Australia and created case file on customer issue #13804088.

1. At the time the works were carried out above, the odometer read 31,860.

1. After being advised that the vehicle was outside the warranty and the works would not be covered by the Dealer or Supplier, Mr Bennett made application to the Tribunal. At the time he was seeking the cost of a new engine for the vehicle from the Dealer only.
2. Due to some false starts due to the unavailability of the Bennetts, the matter eventually came on for a directions hearing on 8 March 2017. At that hearing, the Dealer was given the opportunity to arrange an inspection of the vehicle. Mr Bennett was also given leave to join the manufacturer of the vehicle as defined under the Australian Consumer Law. He subsequently joined the Supplier, who by order dated 24 March 2017 was given to 15 May 2017 to provide an expert report. The matter was listed for a compulsory conference on 29 May 2017.
3. On 31 March 2017, Mr Bennett sent a copy of an expert report by Robert Chapman to the Dealer, the Supplier and the Tribunal.
4. On 11 April 2017, the Supplier wrote to the Bennetts and offered to "cover the cost of the repair of the engine" on the provision that the case was withdrawn from the Tribunal.[4]
5. On 18 April 2017, Mr Bennett replied to the offer and asked for the "fair and reasonable expenses we have incurred throughout this ordeal". He was referring to the following -
   • (a) Costs of expert witness report from Robert Chapman ($3,905.00),
   • (b) Pickards Automotive towing, storage and disassembly ($6,593.00),
   • (c) Vehicle insurance with AAMI ($1,049.48),
   • (d) Car registration ($787.40),
   • (e) Use of company vehicle ($3,110.80), and
   • (f) VCAT fees ($575.30).
6. On 3 May 2017, the Supplier repeated its offer for a replacement engine and advised they would also cover the cost of a loan vehicle while the repairs were undertaken. It went further to add "We are of the opinion that Jaguar Land Rover Australia has acted fairly and responsibly in this matter, therefore we will not be covering any further expenses incurred."[5]
7. On 4 May 2017 Mr Bennett responded to that offer. His response sums up the position and submissions made at the hearing -

"We believe the damages listed in our statement of claim to be fair and reasonable and are the direct result and consequence of your representative dealer Lance Dixon failure to correctly investigate and diagnose the cause of the damage to our Jaguar engine, and on the basis of this incomplete inspection and incorrect diagnoses declined responsibility, thereby forcing us to be exposed to the costs of having the engine removed (Pickards Automotive) and engaging an independent automotive engineer and expert witness (Mr RA Chapman) to dismantle and inspect the engine to diagnose the exact cause of failure.

Further your failure to inspect the engine after it had been dismantled demonstrated your lack of interest in discovering the true cause of failure, a point that would be made clear to the Tribunal."

1. The Supplier did not attend the compulsory conference at the end of May and it was adjourned to 12 July 2017. The matter did not settle on that return date and the Supplier was given a further opportunity to examine the vehicle and serve an expert report.[6]
2. The Supplier did not provide any expert report, instead relying on cross examination of the Bennett's expert witness in support of its position.

1. Robert Chapman, a qualified automotive mechanical engineer with more than fifty years continuous industry experience, including over a decade on Jaguar engines, provided an expert report to the Tribunal.[7]
2. After detailing his examination of the engine, complete with associated photographs, Mr Chapman concluded -

The principle cause of failure of the subject engine was as a directly (sic) result of the piston rings not bedding-in correctly after the engine was first assembled by the manufacturer.[8]

In my opinion it was the failure of the piston rings to effectively 'bed-in' to the cylinder bores which displayed a surface condition totally inconsistent with a vehicle which has travelled only 31,000kms.

The failure of the piston rings to effectively complete the 'bedding-in' process is the result of an incorrect ('cross hatch') honing finish having been applied to the cylinders bores at the time of manufacture or faulty piston rings fitted by the manufacturer during engine assembly or possibly both.[9]

1. In reference to the possibility that the Bennetts had in some way caused the failure of the engine, Mr Chapman stated -

A comprehensive mechanical examination and independent expert oil analysis of the subject engine has established to my satisfaction that the omission of a basic service upon a prescribed date had absolutely no bearing on the failure of the subject engine.

The 'Bedding-in' process should have routinely occurred within 5,000km travelled from new and most certainly by the time the first service was performed at 9,132km.

I have not seen any evidence which would suggest the owner has contributed in any way toward the failure of the piston rings to 'Bed-in' or the pitting damage noted upon the cylinder bores.[10]

1. When asked at the hearing whether the failure of the piston rings to 'bed-in' could have been detected prior to the breakdown of the engine, Mr Chapman advised that -

The consequence of bedding in would sometimes be high oil consumption or unsatisfactory performance of the vehicle, those sort of things. It may not be apparent to the driver or owner of the vehicle that this hasn't happened, it's more that the service department would probably pick it up when they changed the spark plugs, they would see evidence. This was a very wet engine, all inside of the cylinder head, of the combustion chamber was all wet. So it would have been evident.

1. During cross examination, Mr Chapman was questioned about other possible causes of the failure, including whether using a low octane fuel would have resulted in the failure of this engine. He responded -

"Well this engine is fitted as you know with knock sensors so when the engine senses detonation that's recorded .... so if low octane fuel was used in it, the knock sensors would have recorded that and prevented it from detonating. But of course the performance of a car would be notably reduced"

"Yes they would to some degree - but there was so much oil in there that it would only take one second or half a second of detonation to produce that temperature and that pressure which is what has caused that piston to burn. And that oil has been in the engine for a long time, the rings have never been healed and so it was quite preventative for that to ...occur"

So are we talking a one off event here or was it happening gradually over time?

"Well I would say it's probably a one event that has burnt that piston like that - it only takes seconds, a matter of seconds to burn".

"No I don't believe so - no - because of the knock sensors. If you put 91 octane fuel in or whatever the lowest fuel is, the knock sensor would just drag the ignition timing back, so that as soon as it heard it detonate once, it would drag it back until it couldn't detonate any more and prevent that damage."

1. In summary Mr Chapmans opinion was that it was far more probable it was the oil that ultimately caused the engine to fail, rather than any water in the fuel, as there was such a wet engine. He concluded by stating that all four pistons had 'blow-by', every cylinder had 'blow-by', but there was only one that was broken. He said that in his opinion it was only a matter of time before the others broke.
2. In reliance on the expert opinion of Mr Chapman, which was not discredited or undermined during the hearing, I am satisfied that the failure of the engine was a direct result of the piston rings not bedding-in correctly.

1. In light of the conclusions about the failure of the piston rings to bed-in, I also find, on the basis of Mr Chapman's expert opinion, that an issue with the manufacturing of those rings and/or cylinders was the reason the rings did not bed-in.
2. I find that there is no evidence that the actions of the Bennetts have contributed to the failure of the engine, either through any delay in having the vehicle serviced or the suggestion that a low octane fuel was used. Both of these suggestions were discredited by Mr Chapman.
3. As the failure of the engine arose due to an issue in the manufacturing process, the Supplier is liable for the replacement of the engine.
4. During the hearing, the Supplier acknowledged that it was ready and willing to replace the engine at no cost to the Bennetts, and provide them with a replacement vehicle while the works are carried out.
5. In light of my findings and the offer that has been made, I will make orders accordingly.

1. In addition to seeking a new engine, the Bennetts are also seeking reimbursement of additional costs and expenses they say they incurred as a result of the Supplier denying liability to replace the engine and also of having to pursue their claim through VCAT.
2. It is clear that had the Bennetts not engaged the services of Mr Chapman to establish the cause of the engines failure, they would not have been able to persuade either the Supplier, or possibly even the Tribunal, that they were entitled to a new engine. It was only after provision of the report by Mr Chapman by the end of March 2017, that there was any offer from the Supplier or any acknowledgement of responsibility. Prior to this, the Supplier had at all times denied any gesture of goodwill.

1. As such I am of the view that the expenses of Mr Chapman in providing the report ($3,905.00), and the towing and disassembly of the engine by Pickards ($6,593.00) are damages flowing from the failure of the engine that the Bennetts are entitled to be reimbursed.[11] Similarly, the Bennetts have incurred the added expense of having a vehicle registered ($787.40) and insured ($1,049.48) which they have not had the benefit of using for over twelve months. They are also entitled to be compensated for these expenses.
2. Mr Bennett gave evidence that while they now have the use of a relative's vehicle, there was a period of time where his wife had to use a company car, which resulted in him having to compensate an employee of the company business for not having use of that vehicle. The Supplier has acknowledged that the damages of $3,110.80 are far less than the costs of hiring a vehicle during this period of time and does not dispute the amount claimed. I am satisfied that the use of an alternate vehicle is an expense that arises from the failure of the engine and that the amount sought is more than reasonable.
3. In summary, there will be an order for damages to be paid by the Supplier to Mrs Bennett in the amount of $15,445.68. This comprises (a) the costs of the expert witness report from Robert Chapman ($3,905.00), (b) Pickards Automotive towing, storage and disassembly ($6,593.00), (c) vehicle insurance with AAMI ($1,049.48), (d) Vicroads registration ($787.40) and (e) use of a company vehicle ($3,110.80).

1. In any claim before VCAT, ordinarily each party bears their own costs.[12] However, I am satisfied that it is fair in these circumstances that the Supplier reimburse the Bennetts the costs they have incurred to have Mr Chapman attend the hearing. I reach this conclusion taking into account the benefit and impact that evidence had on the outcome of the proceeding, the offers made after service of the expert report and the failure of the Supplier to have its own expert attend the hearing.[13]
2. Mr Chapman advised during the hearing that his costs to attend the hearing were $220.00 per hour. Taking into account the travel required, the need for a conference to commence, and the period of time of the hearing (being one and a half hours), I allow four hours at the rate incurred, being a total of $880.00.

1. The Bennetts also seek reimbursement of the fees paid to the Tribunal of $575.30. Given the success of the Bennetts in taking this matter to both the Tribunal and the hearing, they are entitled to such reimbursement from the Supplier.[14]

1. In conclusion, the Bennetts have succeeded in their claim, and I shall make orders accordingly which incorporate the following -
   1. The name of the applicant will be amended from Andrew Bennett to Vanessa Bennett to reflect the legal owner of the vehicle.
   2. The Supplier is liable to replace the engine of the vehicle with a new engine at its expense.
   3. The Supplier is liable to provide Mrs Bennett with a loan vehicle until it carries out repairs and returns the subject vehicle.
   4. If there is any issue of compliance with the repair order, Mrs Bennett can write to the Tribunal and ask for a further hearing.
   5. The Supplier must pay Mrs Bennett the sum of $15,445.68 for damages associated with the failure of the engine.
   6. The Supplier must also pay Mrs Bennett costs of $1,455.30 arising from making the application and having to attend a hearing.
   7. The claim against the Dealer will be dismissed.

[1] While the application was made in the name of Andrew Bennett, the proper applicant is Mrs Bennett, as owner of the vehicle. The issue was raised during the hearing, and there was no objection to the application being amended accordingly.

[2] This was the terminology used on the invoice. No explanation was provided by the service mechanic as to this reference.

[3] Service Tax Invoice document number 1524493 dated 23/1/14.

[4] Letter from Juan Hacelas, Customer Relations Executive for Jaguar Land Rover Australia dated 11 April 2017.

[5] Letter from JLRA dated 3 May 2017 to Mr Bennett, copied to the Tribunal.

[6] Directions orders of Member A Kincaid gave the Supplier to 4 September 2017 to provide an expert report.

[7] Independent Automotive Expert Witness Report dated 30 March 2017.

[11] Section 236 of the Australian Consumer Law.

[12] Section 109(1) of the Victorian Civil and Administrative Tribunal Act 1998.

[13] Section 109(3) of the Victorian Civil and Administrative Tribunal Act 1998.

[14] Section 115B of the Victorian Civil and Administrative Tribunal Act 1998.