Damanios v Stateroads Pty Ltd

RESPONDENT'S DOCUMENTS

1. The respondent's documents were as follows: 1. A statement of Mr Cook dated 7 July 2015; 2. An email from Mr Cook to the applicant dated 25 March 2015; 3. The vehicle inspection report of the respondent dated 21 February 2015; 4. Quotation from Parramatta Prestige Auto Centre date 6 July 2015 in respect of "BMW E90 320i O/S/F strut. Good second hand. Labour R & R" in the sum of $390.00; 5. A document entitled "draft invoice" from Ramspeed Automotive dated 6 July 2015 in respect of "shock absorber" and "labour charges" in respect of removing old and installing new front right side shock absorber as required" in the sum of $453.75; 6. A quotation of Bruce Lynton BMW dated 1 July 2015 with a part reference number and a description "front right" in the sum of $392.09; 7. A quotation of RAS Automobile Services dated 1 July 2015 in respect of "R/R front shock absorber, new genuine BMW Right Front strut; labour 2 hours @ $90.00 per hour" in the sum of $706.38.

APPLICANT'S EVIDENCE

1. The applicant stated that he viewed the vehicle on 20 February 2015, and test drove it. According to the applicant, the vehicle "veered to the left" when he took his hands off the steering wheel. The applicant told the vendor he would place a deposit and complete the purchase subject to a pre-purchase inspection report being completed. The applicant decided to engage the respondent to perform a pre-purchase inspection report on the vehicle.
2. The inspection of the vehicle occurred on 21 February 2015, at the address of the vendor of the vehicle. The vehicle inspector was named "Kurt" ('the vehicle inspector'). According to the applicant, after inspecting the vehicle, Kurt said to him words to the effect of "don't buy the vehicle" due to "scratches" and "oil leaks". The applicant stated he spoke to the vehicle inspector about the reason the vehicle was pulling to the left. The applicant stated that the vehicle inspector told him the vehicle required a wheel alignment, but didn't say anything in respect of suspension damage.
3. The applicant stated that he respondent's report was emailed to him at approximately 12.30 pm, and he had a further telephone conversation with the vehicle inspector who, according to the applicant, "confirmed" the vehicle required a wheel alignment and said nothing about suspension damage.
4. The applicant completed the purchase of the vehicle on 23 February 2015. He did not state how much he paid for the vehicle, or whether he had negotiated a reduction in the purchase price on the basis of the respondent's report. The applicant stated he was "not worried" about the oil leaks and scratches on the vehicle, and decided to purchase the vehicle because it had low kilometres for its age, and the vehicle inspector had not told him there was any significant suspension damage.
5. After purchasing the vehicle, the applicant stated he drove the vehicle from Canterbury to Bondi Junction to have child seats fitted. According to the applicant, the mechanic (named "Luke") who installed the car seats told him the vehicle had a broken strut and was likely to have a damaged hub and bearing. The mechanic also told him that the camber on the right wheel had dropped.
6. On 24 February 2015, the applicant took the vehicle to "his mechanic" named "Steve". No expert report or statement was in evidence from "Steve". The applicant was told take the vehicle to "Heasmans suspension specialists".
7. On 27 February 2015, the applicant took the vehicle to Heasman Steering Pty Ltd in Sydenham. The applicant obtained a quote to conduct repairs in the sum of $2,282.43. The quotation is for parts of $1,514.94 and labour of $560.00, in a total sum of $2,282.43. The quotation states "this is an estimate only based on our visual inspection, possible further damage may be evident after dismantling". The quotation contains no explanation of what was defective about the vehicle, or the reason for the defects.
8. The applicant stated that he took the vehicle to Heasman Steering Pty Ltd on 24 February 2015. However, the quotation from Heasman Steering Pty Ltd makes no reference to 24 February 2015, and the document states that the "est date" is 27 February 2015, and the document is dated 27 February 2015.
9. On 25 February 2015, the applicant telephoned Mr Cook and complained that the pre-purchase inspection report had not revealed that the right front suspension had dropped with the camber of the wheel being out of alignment, and the vehicle had suspension damage. Mr Cook sent another mechanic to inspect the vehicle. There was no report, or statement from this mechanic, in evidence from the respondent.
10. According to the applicant, the mechanic from the respondent informed him that the problem was that a suspension bolt was loose, which had caused the right front strut to "drop", and he tightened the bolt.
11. On 27 February 2015, the applicant spoke to Mr Cook, and emailed photographs of the vehicle to Mr Cook. The applicant complained that the right front suspension damage should have been revealed in the pre-purchase inspection report, and sought compensation. After the conversation with Mr Cook, the applicant sent a further email on 27 February 2015 to Mr Cook stating: "I am disappointed to hear the response of your superiors stating that the problems with the car's strut was adequately addressed in the report. I am also disappointed with the attitude of your superiors who have told you they do not want to discuss a financial adjustment as the car's issues were noted in the report".
12. On 6 March 2015, the applicant took the vehicle to BMW Sydney Mini Garage, where the vehicle was inspected and a quote for repairs provided. The quote is for an amount of $5,733.75, and contains a number of items of repair that do not pertain to the proceedings, but also contains items in respect of "replacing bearings of front wheel"; "replacing left or right front spring strut", a wheel alignment; and "adjusting front and rear axle".
13. On 12 March 2015, the applicant obtained a quote for repairing the front suspension of the vehicle from Pedders Suspension Mascot. The quote is in the form of an email, and does not state who at Pedders Suspension Mascot gave the quote. The quote is for $7,740.00, and relevantly states "the right and side front wheel is leaning in due to the strut being bent and the measurements on the strut left side are different to the right hand side". It does not appear the applicant sent this correspondence to the respondent prior to commencing proceedings in the Tribunal, despite sending other quotations and photographs to the respondent.
14. On 14 March 2015, the applicant obtained a statement from the vendor of the vehicle, which was subsequently annexed to a statutory declaration. The vendor of the vehicle states that "just prior" to selling the vehicle, the front right wheel of the vehicle hit a concrete road divider, and the front right tyre was replaced. The vendor states she did not disclose this to the applicant.
15. On 24 March 2015, the applicant emailed Mr Cook the quotations from Heasman Suspension Pty Ltd and BMW Sydney, together with a letter of demand. The letter of demand states that "the service you provided was unsatisfactory because it did not adequately address a serious problem with the car's front suspension".
16. On 26 March 2015, Mr Cook replied stating that the reason the suspension had dropped and the front right wheel was off camber was because "the strut had dropped" and the "bottom bolt needed tightening up". The correspondence also states that the pre purchase inspection report noted that the suspension "had a problem" and required repairs, together with "numerous other repairs noted on the report". The correspondence asserts that Mr Cook had spoken to the applicant and the applicant had stated that the vendor had reduced the price of the vehicle based on the repairs needed to the vehicle as disclosed in the pre-purchase inspection report.
17. On 12 May 2015, the applicant went to BMW Sydney and spoke to the service manager and the workshop foreman. The applicant showed them photographs of the suspension of the vehicle taken at Heasman Suspension Pty Ltd. Following the meeting, on 12 May 2015, the service manager, Mr Rosenthal, sent an email to the applicant stating relevantly: "Photo 7 is of the right front suspension strut that is clearly bent and photo 5 is of the left front suspension strut, taken from the rear. It is also worth noting that the strut has a welded tag, so that even if the pinch bolt was to become loose it cannot slip down any further than the hub assembly".
18. On 30 June 2015, the applicant obtained a report from Mr Philip Scott, automotive consulting engineer. The contents of the report are discussed below.
19. On 3 July 2015, the applicant obtained quotations from Jax Spinning Wheel Tyres regarding the cost of tyre replacement and wheel alignment.
20. The applicant asserted that he had continued to drive the vehicle on a regular basis since purchasing it, and estimated the vehicle had travelled approximately 5,000 klms since he purchased it. The applicant stated he had no choice but to drive the vehicle as his family relied on it for transport, and that registration on the vehicle was about to expire.

Report of Philip Scott dated 30 June 2015

1. Mr Scott is an automotive engineer, whose qualifications are set out in his report, and the report acknowledges and adopts the Tribunal's Code of Conduct for expert witnesses. The report is 4 pages. Mr Scott did not inspect the vehicle, but reviewed documents sent by the applicant and provided an opinion on the issue of repairs to the vehicle and the pre-purchase inspection report of the respondent.
2. Mr Scott refers to the pre-purchase inspection report, and states that the report "details the front suspension and specifically the right front suspension strut as serviceable and with no comment. There is no comment attached relating to problems being observed relating to the front struts on the vehicle". Mr Scott asserts that in respect of the tyre wear indicated in the report that: "The type of wear would indicate to a person experienced in mechanical systems and repairs the possible causes of the particular type of tyre wear. There is no reference to the type of tyre wear in the report."
3. In respect of the notation contained in the pre-purchase inspection report that the vehicle "drives two (sic) left on test drive requires repairs and wheel alignment", Mr Scott states: "There is no reference made to the possible cause of this problem and no further assessment was provided by the inspector to determine any potential faults in the vehicle or suspension or steering systems."
4. In respect of repairs to the vehicle, although Mr Scott had not viewed the vehicle, he asserts that replacement of the front suspension strut "includes the shock absorber being part of the assembly. To replace one shock absorber only is a bad work practice and is not recommended by the component or the vehicle's manufacturer. To correctly repair the vehicle to a safe and roadworthy condition and to prevent premature tyre wear will require the replacement of the right hand side front strut assembly. To maintain the vehicle stability and safety the left front shock absorber should also be replaced to maintain a balance in the front suspension of the vehicle".

APPLICANT'S SUBMISSIONS

1. The applicant's submission was that he would not have purchased the vehicle if he had been informed there was a damaged front right suspension strut, despite having been advised not to purchase the vehicle by the respondent's inspector because of oil leaks and scratches on the vehicle. The applicant' submitted that he should be compensated by way of the cost of replacement suspension parts and labour (the parts being new BMW replacement parts) as set out in the quotations he obtained.

RESPONDENT'S EVIDENCE AND SUBMISSIONS

1. The respondent did not provide a written statement, nor called evidence, from the inspector "Kurt". Mr Cook stated that "Kurt" was a highly experienced inspector, but was suffering health problems and could not give evidence. No medical evidence was provided to the Tribunal in this regard.
2. Mr Cook submitted that the pre-purchase inspection report made clear to the applicant that there were issues with the vehicle driving to the left and that the vehicle required "repairs and a wheel alignment". Mr Cook submitted that the applicant was sufficiently on notice by reason of the contents of the report that there was a risk in purchasing the vehicle that it required suspension repairs. Mr Cook initially did not concede that the vehicle had a bent right front suspension strut at the time of the inspection, but was prepared during the hearing to accept the strut was bent. However, Mr Cook did not concede that this was something that should have been discovered or disclosed in the pre-inspection report, or during the applicant's subsequent conversation with "Kurt".
3. Mr Cook stated that, when the applicant called him soon after purchasing the vehicle, his primary complaint was that the suspension had "dropped". Mr Cook asserted that this was due to a loose right front strut suspension bolt, not due to the strut being bent. Mr Cook asserted that, if the right suspension strut needed to be replaced, that the evidence of the applicant regarding the cost of repairs was excessive, with the respondent's quotes ranging from $390.00 to $706.38. Mr Cook asserted that the struts of the vehicle would have naturally worn and been required to be replaced in any event, and estimated this would need to be done every 150,000 klms.

The Contents of the Pre-Purchase Inspection Report

1. The report states, on its first page "Inspection and assessment has been by visual and noise appreciation only and no adjustment have (sic) been made nor components dismantled to confirm diagnosis. Whilst every care is taken StateRoads Vehicle Inspection cannot report about a defect if we cannot see or it does not appear during inspection. It is in the opinion of our experienced inspectors that the items are in the condition as indicated in the report."
2. In respect of the steering, brakes and suspension of the vehicle, the report states that the right front "strut/shock" had been inspected. The "added notes" state: "Some wear visible at suspension and bushes etc but consistent with age and kilometres. Control arm bushes have wear. Monitor and replace as required. The report contains a road test report of the vehicle. It relevantly states: "This car drives and performs well, no mechanical faults in drive line were detected during test drive. Vehicle drives two (sic) left on test drive requires repairs and wheel alignment".
3. The "summary" of the report on its final page states: "Vehicle is in fair-average general condition for its age and mileage. This vehicle has some damage and dents to panels and needs mechanical repairs to bring vehicle to a satisfactory condition. Vehicle will need early servicing/repairs to avoid any consequential damage…Vehicle requires servicing/repairs as mentioned in report".
4. The conclusion of the report contains the following statement: "Please ensure to read this report in full including any added notes which may point out any repairs, servicing, faults, problems. Further explanation of the report is made by speaking direct with your inspector, whom will phone you after the inspection or by the end of that working day, if you are not available to take the call please phone the inspector as a verbal explanation of the inspection report is important. WE STRONGLY SUGGEST a final visual inspection of a vehicle at the time of settlement, as it is the responsibility of the purchaser. StateRoads cannot be held liable for any dents/Damage or mechanical condition change or alterations after the initial inspection".

JURISDICTION

1. The applicant is a "consumer" within the meaning of Section 3 of the Consumer Claims Act 1998 ('the CCA') and the claim is a "consumer claim" within the meaning of Section 3A of the Act. The proceedings have been brought within the relevant limitation period in Section 7 of the CCA, and the Tribunal has jurisdiction.

APPLICABLE LAW

1. The Australian Consumer Law 2010 ('the ACL') is part of the law of NSW, pursuant to Section 28 of the Fair Trading Act 1987. Section 60 of the ACL states as follows: "If a person supplies, in trade or commerce, services to a consumer, there is guarantee that services will be rendered with due care and skill".
2. Pursuant to Section 3(1) (a) (i) of the ACL, the applicant is a "consumer" within the meaning of the ACL.
3. The consumer guarantee that services be provided with "due care and skill" that is implied into consumer contracts is a guarantee that the services will be performed in a "careful, skilful, and workmanlike" manner. However, the test is an objective test (Mayne Nickless Ltd v Crawford (1992) 59 SASR 490; Read v Nerey Nominees Pty Ltd [1979] VR 47 at 49; S.G. Corones The Australian Consumer Law (2011) Lawbook Co pp 361-362), and all of the facts and circumstances must be considered in the context of the application of an objective standard of due care and skill.
4. If there is breach of a consumer guarantee provision of the ACL, the appropriate measure of damages is in contract, rather than negligence. Accordingly, damage must not be too remote from the breach (applying the principle of Hadley v Baxendale (1854) 156 ER 145) and if breach is demonstrated and the loss is not too remote, the guiding principle for assessment of damages is an amount of money that would put the party in the position it would have been had the breach not occurred (Clark v Macourt (2013) 304 ALR 220). Further, there must be a causal nexus between the breach and the loss suffered. Causation is to be determined by looking at all the facts and circumstances to determine whether the breach was a cause of the loss, unless there is an intervening act or event that in a practical sense is the sole cause of the damage (Alexander v Cambridge Credit Pty Ltd (1987) 9 NSWLR 310 at 361; Chand v Commonwealth Bank of Australia [2015] NSWCA 181).
5. Under Section 18 of the ACL, a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or likely to mislead or deceive. There does not have to be an intention to mislead or deceive, and the test of whether or not the conduct is misleading or deceptive is an objective test, looking at all the facts and circumstances. The relevant principles pertaining to misleading or deceptive conduct are succinctly summarised by Brereton J in Perpetual Trustee Company Limited & Anor v Ishak [2012] NSWSC 697 at paras [75]-[76].

APPLICATION OF FACTS TO LAW

1. The evidence of the vehicle having bent right suspension strut comes from the photographs taken of the suspension of the vehicle (which the applicant asserts were taken at Heasman Steering Pty Ltd on 27 February 2015; the quotation of Pedders Suspension Mascot dated 12 March 2015; and the email of Mr Rosenthal of BMW Sydney dated 12 May 2015 (which are based on the photographs he was given by the applicant). Neither the quotation of Pedders Suspension nor the email of Mr Rosenthal state how badly bent the suspension strut is, nor that it is a defect of the vehicle that should have been discovered and disclosed in the pre-purchase inspection by the respondent.
2. Mr Rosenthal refers to the strut being "clearly" bent, but does not further elaborate. The quotation of Pedders Suspension (which is in an email form, and the author of the email is not disclosed) states that "the right hand side front wheel is leaking due to the strut being bent", but also does not further elaborate upon whether this is a defect that should reasonably have been discovered in the pre-purchase inspection by the respondent. The brevity of the email from Pedders Suspension and the fact the author of the email is not disclosed means the Tribunal gives little weight to the document.
3. There is sufficient evidence to infer that the vehicle had a bent right suspension strut at the time the applicant purchased the vehicle. However, there is insufficient evidence to make factual findings in respect of how badly bent the strut was, or that it was an obvious defect, or that it was the bent strut that caused the suspension of the vehicle to "drop" after the applicant purchased the vehicle.
4. A key document in respect of whether there is breach of Section 60 of the ACL is the report of Mr Scott. Importantly, Mr Scott did not inspect the vehicle, and his report is exclusively based on what he was told by the applicant; the quotes he was provided; and the pre-purchase inspection report of the respondent. Mr Scott's report does not state whether or not he was provided by the applicant the photographs of taken of the vehicle's suspension.
5. Critically, Mr Scott does not state in his report that a reasonably diligent experienced mechanic performing a pre-purchase inspection report of a used vehicle should have discovered a bent suspension strut of the vehicle, or that there was a reasonable possibility the vehicle had a bent suspension strut, and informed the applicant of the defect (or the reasonable possibility that there was such a defect). Mr Scott refers to the pre-purchase inspection report not making reference to the possible causes of the vehicle steering to the left or the potential causes of the tyre wear of the vehicle, but does not state that a reasonably diligent inspector should have diagnosed the existence (or possible existence) of a bent suspension strut and specifically raised such an issue with the prospective purchaser. There is also no reference in the report of Mr Scott as to why the vehicle's suspension "dropped" or that this was attributable to the bent strut.
6. In circumstances where Mr Scott did not inspect the vehicle, nor is it clear from his report he was given photographs of the suspension, the Tribunal gives the report significantly diminished weight (Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588). There is also no evidence from "Steve", the person the applicant described as "his mechanic" who he took the vehicle to before the vehicle was taken to Heasman's Steering Pty Ltd. The applicant has driven the vehicle since its purchase, and accepts that he was orally told by 'Kurt' not to purchase the vehicle (although due to defects other than the suspension). The pre-purchase inspection report does refer to the vehicle needing "repairs" together with a wheel alignment.
7. The Tribunal is not satisfied the applicant has proved on the balance of probabilities that a reasonably diligent mechanic performing a pre-inspection report of the applicant's vehicle should have discovered the vehicle had a bent right front suspension strut, or specifically raised the possibility of such a defect with the applicant prior to the applicant purchasing the vehicle. Accordingly, the Tribunal is not satisfied the applicant has proved the respondent breached Section 60 of the ACL.
8. In light of the above findings, the Tribunal is not satisfied that the representation that the vehicle needed "repairs and wheel alignment" and silence as to whether or not the vehicle had a bent right suspension strut is a breach of Section 18 of the ACL.
9. As the applicant has not proved breach on the balance of probabilities, it is unnecessary to consider the issues of causation, remoteness, and quantum of damages.
10. For the above reasons, the application is dismissed. G J Sarginson General Member Civil and Administrative Tribunal of New South Wales 22 September 2015 I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 October 2015