Ehlers v Performax International Pty Ltd [2025] QCAT 233

Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 42

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

• [1] Mrs Ehlers purchased for her husband a new white 2017 model TI Nissan Titan utility ('the vehicle') from Performax International Pty Ltd ('the Respondent') for a purchase price of $116,694.70, and total settlement sum including taxes and insurance of $125,000. The vehicle had been imported from the United States and converted to right-hand drive. Mrs Ehlers and the Respondent signed a new vehicle purchase contract and warranty on 30 June 2020. The warranty term was 39 months expiring on 30 September 2023.
• [2] In October 2023, 10 days after the expiration of the warranty term, while Mr and Mrs Ehlers were on a caravanning holiday in Bathurst, the vehicle's engine failed. The vehicle has not been driven since. The vehicle was initially towed to the Respondent's premises where the Respondent determined that the engine needed to be replaced at the Ehlers' cost as the warranty had expired. The vehicle was then towed to the Ehlers' property on the Sunshine Coast where it remains.
• [3] Mr Ehlers applied to the Tribunal seeking to exercise the statutory consumer guarantee on the grounds of a major failure of the vehicle and seeking an order that the Respondent repair or replace the vehicle's engine.
• [4] The Tribunal appointed motor vehicle assessor, Mr Robert Haigh, to assess the vehicle, at a cost shared equally by the parties. Mr Haigh produced a Motor Vehicle Assessment Report dated 14 June 2024 and filed in the Tribunal on 21 June 2024.
• [5] At the hearing of this matter, Mr and Mrs Ehlers appeared on their own behalf, and Mr Kevin Thoroughgood and Mr Greg Waters appeared on behalf of the Respondent.
• [6] The Tribunal called Mr Haigh to attend the hearing by telephone and give evidence.

• [7] At the commencement of the hearing, I asked Mr Ehlers why he had been named as the applicant in the proceeding when his wife's name is on the new vehicle purchase contract. He explained that his wife had purchased the vehicle for him as a gift, however the vehicle is registered in their joint names.
• [8] I confirm my finding at hearing that the correctly named applicant in the proceeding is 'Brian Ehlers' and 'Vicki Ehlers'.
• [9] Pursuant to section 42 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) ('the QCAT Act'), I confirm my order at hearing that 'Vicki Ehlers' is added as an Applicant in the proceeding.

• [10] Section 16 of the Fair Trading Act 1989 (Qld) ('FTA') provides that the Australian Consumer Law text applies as a law of Queensland and as such may be referred to as the Australian Consumer Law (Queensland) ('the ACLQ').
• [11] Pursuant to section 50A(1) of the FTA, a person may apply to the Tribunal seeking certain orders for an action under the ACLQ relating to a motor vehicle where the amount sought or value of other relief is not more than $100,000.
• [12] I am satisfied the Tribunal has jurisdiction to hear and determine this matter.

• [13] Section 54(1) of the ACLQ provides that, where a person supplies goods in trade or commerce, the goods are guaranteed to be of 'acceptable quality'.
• [14] Section 54 subsections (2) and (3) of the ACLQ provide that:

(2) Goods are of acceptable quality if they are:

(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.

• [15] 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.
• [16] The test for whether goods are of acceptable quality adopts the 'reasonable consumer' benchmark; that is, a reasonable consumer fully acquainted with the state and condition of the goods (including any hidden defects) having regard to the nature and price of the goods and other circumstances relating to their supply.
• [17] Where the consumer guarantee is not complied with, the consumer may take certain action against the supplier.[1]

• [18] The parties filed the following material, which was read into the Tribunal's record:

(a) New Vehicle Purchase Contract #4947 dated 30 June 2020.

(b) Warranty #PPLS2259475 dated 30 June 2020.

(c) Bathurst Motor Group invoice dated 13 October 2023.

(d) Performax International invoice and related email correspondence dated 5 February 2024.

(e) Statement of evidence - Vicki Ehlers dated 27 May 2024.

(f) Statement of evidence - Brian Ehlers dated 27 May 2024.

(g) Statement of evidence - Geoffrey Robertson dated 3 May 2024.

(h) Statement of evidence - Greg Waters dated 29 May 2024.

(i) Motor Vehicle Assessment Report by Robert Haigh dated 16 June 2024.

• [19] Mr and Mrs Ehlers gave or concurred with evidence at hearing in response to my examination, which I summarise as follows:

(a) The vehicle was sold as an extra duty pick-up truck with a 5 litre Cummins V8 turbo diesel engine promoted as having legendary power, reliability and efficiency. The Applicant bought the vehicle to tow their caravan.

(b) The Applicant had the vehicle serviced by the Respondent every 6 months since purchase before engine failure; in total, 7 services and 7 oil changes over a total mileage of 49,000 kilometres.

(c) The vehicle had gone into limp mode on many occasions due to the turbo. The Respondent could not diagnose the problem because they did not have the correct software, so the vehicle was sent to another company, SCD at Brendale; they diagnosed issues with the turbo and repaired under warranty.

(d) When the malfunction light came on in the vehicle before the Applicant left for their caravanning holiday, the Respondent told them the vehicle was okay to drive with the light on because it was just the sensor. At the time, the Respondent performed a regeneration, for which the Applicant was charged $455 whilst the vehicle was still under warranty.

(e) Whilst in Bathurst on their caravanning holiday, the Applicant took the vehicle to Bathurst Nissan, concerned about the malfunction light persisting. Bathurst Nissan cautioned the Applicant that they should not be driving the vehicle while the malfunction light was on. Bathurst Nissan scanned the vehicle and found code indicating a high reading for the particulate filter. Bathurst Nissan performed a regeneration then test drove the vehicle, advising that the code had cleared, the malfunction light had not reappeared, and it was okay to drive the vehicle back home to Queensland as long as the light did not reappear. Bathurst Nissan told the Applicant they could not diagnose the problem properly, but the light issue had been addressed so the vehicle could be driven. They also noted that the vehicle was shifting harshly through the transmission, which was consistent with the Applicant's experience of the vehicle since purchase.

(f) When the Applicant proceeded to drive home, the vehicle began shuddering abruptly before the engine shut down completely.

(g) They would have taken out the extended warranty had it been offered, however it was not offered.

• [20] Mr Thoroughgood and Mr Waters gave or concurred with evidence at hearing in response to my examination, which I summarise as follows:

(a) They do not disagree with the Applicant's expectations of the vehicle or their account of what occurred with the vehicle.

(b) They are not the manufacturer of the vehicle, only the seller; they did the right thing by providing a warranty.

(c) Their concern is that the codes found by Bathurst Nissan could mean possible engine failure and yet the vehicle was driven afterwards. Had the vehicle not been driven, it is quite possible there would have been no damage. The Applicant was told by Bathurst Nissan not to drive the vehicle.

(d) The Applicant was offered a 5-year warranty, but they declined. Mr Thoroughgood and Mr Waters were not present for the transaction; they have been told this by the salesperson. The Respondent has a policy to offer an extended warranty.

• [21] Mr Haigh made the following relevant observations/findings in his report:

Carried out scan of vehicle to find codes relating to DPF issues. Vehicle also had crank position and misfire codes stored in engine computer. Carried out further testing to find crankshaft had excessive end float indicating crank had failed. Removed oil filter and inspected oil to find some metal particles in engine oil indicating catastrophic engine failure. Turned engine over to confirm massive rattle from lower part of engine confirming crank failure. Unable to investigate DPF concerns further as vehicle doesn't run.

Engine has suffered catastrophic engine failure with crankshaft failure. DPF system not operating as designed.

Crankshaft failure likely caused by a manufacturer defect with the crankshaft to have failed prematurely. DPF issues will still need to be further inspected when engine failure is repaired.

[In response to question 3.3.2 Was the defect likely to have been present at the date of purchase of the vehicle] Yes, this engine platform is known for premature crankshaft failure believed to be a manufacturer fault. Currently under investigation by the US Department of transportation, national highway traffic safety administration investigation PE23020 with vehicle build date 2016-2019.

Vehicle engine will require replacement or overhauling, with inspection to attached parts for serviceability. Vehicle will require inspection and testing of DPF system to correctly diagnose concerns as DPF system shouldn't require a forced burn off. This repair should be able to be carried out in a timely manner depending on parts availability.

• [22] Mr Haigh gave evidence at hearing in response to my and the Respondent's examination, which I summarise as follows:

(a) When he inspected the vehicle on 14 June 2024, it was located at the Applicant's Sunshine Coast property. The vehicle could not be started.

(b) He conducted diagnostic testing on the vehicle by connecting the diagnostic tool to the vehicle's engine computer that records the diagnostic trouble code/s. There are specific codes for specific defects. There is no problem with conducting the testing some months after the engine failure because the codes are stored in the engine computer until they are cleared by the action undertaken to address the defect.

(c) He found main three codes. One code related to the diesel particulate filter ('DPF'), a filter in the exhaust to comply with emissions standards. The filter holds the soot particles preventing them from being emitted; when the filter is full, the exhaust heats up to 700 degrees to burn the soot particles off resulting in less carbon being emitted. The code indicated the DPF was blocked.

(d) The other codes related to the crankshaft position and misfire. The position of the crankshaft dictates the engine timing and fuel injection. If the position is wrong, the engine timing is out and misfires.

(e) The crankshaft is a very solid piece of machinery; it takes time to fatigue and crack. The vehicle was not used often and had low mileage, which would explain why it took three years for the engine to fail.

(f) The style of engine in this model year vehicle has a reported problem with the crankshaft snapping at low kilometres; it is an American engine, there are few in Australia. He is not aware of when the US investigation into the problem began and did not offer any further details about the investigation.

(g) Nissan Australia does not have the capacity to test the vehicle with their equipment because the vehicle is imported; they do not have the genuine factory scan tools. Every country is different in the parameters of their scan tools. He however has a generic scan tool that tests motor vehicles across the world.

(h) He did not internally inspect the crankshaft because to do so would require a complete engine disassembly. Rather, he removed the inspection cover on the gearbox and inserted a bar that allowed him to pull back the plate at the back of the engine. He observed that the crankshaft was moving in the engine where it should not be. Crankshafts need oil lubrication; the oil helps reduce friction and wear. He removed the oil filter and found metal particles from the crankshaft in the oil.

(i) He could not inspect the DPF system because to do so would require the engine running to determine the differential pressures and blockage. Excessive back pressure in the exhaust could cause excessive load on the engine when it is not required, which can put extra strain on the crankshaft, connecting rods and pistons.

(j) It is not normal for a DPF system to get blocked. It is an unserviceable component; it operates under its own parameters and requires no maintenance. Usually, a DPF blockage is due to an air leak somewhere in the intake system: the vehicle loses engine boost, the computer detects that and increases the fuel to the engine to increase the boost pressure; more fuel causes more soot particles to collect in the DPF filter, which in turn rapidly causes blockage. He is not certain that the DPF blockage has contributed to the engine failure; he would need to do conduct testing when the engine is running.

(k) He understands the vehicle had been inspected on a couple of occasions for the DPF issue and believes it should not have been driven while the codes indicated the issue was persisting. The forced burn-off or regeneration previously conducted is not the best diagnostic procedure; it should never be required for a properly functioning DPF system.

(l) He does not agree with the Respondent's proposition that where a vehicle like this one is not driven much and treated more like a car, the vehicle needs a forced burn off from time to time. It does not matter how blocked the DPF is; if the vehicle is driven on the motorway at a correct speed with no defects recorded, and if the DPF filter is full, a burn off will automatically be triggered. He does not believe the cause was the low mileage; rather, he believes there was an air leak in the intake and that has caused the soot particles to build up. This is consistent with the codes that Bathurst Nissan found, one relating to turbo boost control and the other relating to crank case ventilation.

(m) He does not believe the conversion to right-hand drive has contributed to the engine failure.

(n) He recommends an engine replacement or overhaul. Replacement viability depends on the availability of parts, which would need to come from the United States. It also depends on how much internal damage there is to the engine; it would need to be stripped down before deciding whether it was rebuildable. If the crankshaft case is damaged from the crankshaft failure, there would need to be an engine replacement. Most people would elect for a replacement because parts are cheaper than labour. The DPS system would need to be investigated further once the engine is fitted.

• [23] I accept the Applicant's evidence.
• [24] I note the Respondent does not, in the most part, contest the Applicant's evidence other than, first, asserting that a 5-year warranty was offered to the Applicant, and they declined. On their own admission, Mr Thoroughgood and Mr Waters were not present for the transaction, and in making the assertion, rely on the account of the salesperson, Mr Paul Frost, and company policy to offer an extended warranty. I note further, in his affidavit (annexed to Mr Waters' affidavit), Mr Frost states that while it is his normal sales procedure to offer an extended 5-year warranty, he cannot recall if he overlooked it on this occasion. I consider Mr Frost's evidence inconclusive and therefore the hearsay evidence of Mr Thoroughgood and Mr Waters unreliable, and I prefer the Applicant's direct evidence.
• [25] In any event, I find the Applicant contracted to receive the benefit of only a 39-month warranty, which expired on 30 September 2023, and the vehicle's engine failure occurred after the expiration of the warranty period, in the early days of October 2023.
• [26] Second, I note the Respondent asserts they are not responsible for the vehicle's engine failure outside the warranty period; had the failure occurred while the vehicle was still under warranty, they would have repaired it. The Respondent argues that they are not the manufacturer of the vehicle, only the seller. This position overlooks the provisions of the ACLQ that impute a statutory guarantee of acceptable quality where a person supplies goods in trade or commerce, regardless of any other contractual warranties, and provide remedies for failure to comply.
• [27] Third, I note the Respondent asserts the Applicant drove the vehicle after being told by Bathurst Nissan not to drive the vehicle, and it is possible that this caused the damage to the engine. Mr Thoroughgood and Mr Waters were not present at Bathurst Nissan when the vehicle was being tested or during any discussions with the Applicant about the vehicle. I prefer the Applicant's direct evidence, which clarifies what occurred at Bathurst Nissan. I accept the Applicant was initially told by Bathurst Nissan they should not be driving the vehicle while the malfunction light was on. However, the Applicant was later told by Bathurst Nissan, after the testing was complete and the light did not reappear, that it was okay to drive the vehicle back home to Queensland as long as the light did not reappear. I accept the Applicant relied on this advice in proceeding to drive home.
• [28] Turning to the vehicle's engine failure and its origins, I prefer Mr Haigh's expert evidence.
• [29] It is Mr Haigh's opinion that the vehicle's engine suffered catastrophic failure as a result of premature crankshaft failure that he believes is due to a manufacturer fault. Mr Waters in his affidavit asserts it would be preferable for any judgements to be withheld regarding engine failures in this model vehicle until the US investigation is finalised. While Mr Haigh referenced the US investigation in his evidence, I am satisfied that Mr Haigh conducted his own investigation of the vehicle's crankshaft to come to the independent conclusion that the vehicle suffered crankshaft failure due to an inherently defective crankshaft. There is no evidence before the Tribunal of the nature or scope of the US investigation or of any findings made.
• [30] It is Mr Haigh's opinion that the vehicle's DPF system was blocked and a properly functioning DPF system should not require a forced regeneration or burn off as was performed by the Respondent prior to the Applicant's caravanning holiday and by Bathurst Nissan during the holiday. Mr Haigh is of the view that a DPF system blockage resulting in excessive back pressure on the exhaust could cause excessive load on the engine and thus extra strain on the crankshaft and other parts. He is also of the view that the blockage was likely caused by an air leak. However, Mr Haigh emphasises that the DPF system requires further investigation and testing, which can only occur once the engine is functional.
• [31] I am satisfied on the evidence that the vehicle's engine failure resulted from a crankshaft failure due to a defect in the crankshaft present at the time the Applicant purchased the vehicle from the Respondent. I consider there is insufficient evidence to make a finding that the DPF system blockage caused or contributed to the vehicle's engine failure.
• [32] As I have already noted, the acceptable quality guarantee applies at the time the goods are supplied to the consumer.
• [33] I consider that, due to the defective crankshaft, the vehicle was at the time of purchase/supply not fit for the purpose for which the vehicle is commonly supplied, that is to perform and be driven as an extra duty pick-up truck promoted for its power, reliability and efficiency, and not free from defects.
• [34] I further consider that a reasonable consumer fully acquainted with the state and condition of the vehicle (including the hidden defect, being the defective crankshaft) would not regard the vehicle as being of acceptable quality having regard to the fact that the crankshaft is critical to the proper functioning of a motor vehicle engine, the representations made by the Respondent in promotional material about the vehicle's performance capabilities, and the substantial purchase price paid by the Applicant for the vehicle.
• [35] I find that pursuant to section 54(1) of the ACLQ the Respondent supplied the vehicle to the Applicant in trade or commerce and in so doing was required to comply with a guarantee that the vehicle was of acceptable quality.
• [36] I find that pursuant to section 54(2) of the ACLQ the vehicle was not of acceptable quality and the Respondent therefore failed to comply with the acceptable quality guarantee ('the Respondent's failure to comply').
• [37] I find the Applicant is entitled to take action against the Respondent pursuant to section 259 of the ACLQ for the Respondent's failure to comply. Pursuant to section 50A(2) and (3) of the FTA, the Tribunal may make certain orders where a person has taken such action, including an order requiring a party to perform work to rectify a defect to a value of no more than $100,000 and an order requiring a party to return goods to a stated person.
• [38] It is Mr Haigh's opinion that the vehicle's engine should be replaced or overhauled, noting that, subject to parts availability, replacement may be more cost effective than overhaul; and further that, once the engine is functional, the vehicle's DPF system should be investigated and tested.
• [39] I rely on Mr Haigh's evidence and will make orders accordingly.

[1] ACLQ ss 259(2), 259(3), 261, 262, 263.