Elivir Halilovic v Prestige Motor Sport Sydney Pty Ltd trading as Prestige Motor Haus Sydney

The applicant's case

1. The applicant relied on the following documents: 1. His application lodged with the Tribunal on 11 April 2017; 2. A letter dated 11 July 2017 signed by Steven Piva of Ferrari Brisbane, which was admitted into evidence over the respondent's objection, but on the basis that the letter was not an expert report complying with NCAT Procedural Direction 3 in respect of Expert Witnesses; 3. A letter dated 29 August 2017 signed by Alex Turner of Ferrari Brisbane which was admitted into evidence over the respondent's objection, but on the basis that the letter was not an expert report complying with NCAT Procedural Direction 3 in respect of Expert Witnesses; 4. Affidavit of Mr Frasca sworn 23 August 2017; 5. Affidavit of the applicant, Elvir Halilovic sworn 31 August 2017 with annexures marked EH 1 - EH 15 (inclusive); 6. Affidavit of Brodie Leonard Hatswell sworn 31 August 2017; 7. Photographs of the vehicle being towed; 8. Affidavit of Brodie Leonard Hatswell sworn 6 November 2017 with annexures BH - 1 to BH - 5 (inclusive); 9. An English translation of the invoice for the purchase of a gearbox from ENFA International; 10. Written submissions dated 17 November 2017; 11. Written submissions dated 1 December 2017 responding to the respondent's written submissions.
2. The applicant supplemented his case at the formal hearing with the sworn oral evidence of the applicant (subject to cross examination by the respondent's counsel) and the sworn oral evidence of Mr Frasca given by telephone (also subject to cross examination by the respondent's counsel). The applicant's solicitor also made oral submissions.
3. In the application lodged with the Tribunal on 11 April 2017, the applicant sought damages in an amount of $29,782.00 against the respondent.
4. In essence, the applicant's case is that he was sold a defective vehicle by the respondent and that it is open to the Tribunal to award him damages for breach of contract or in the alternative damages under the Australian Consumer Law (NSW) (the "ACL NSW").
5. Relevantly, the applicant's application lodged on 11 April 2017 states: The vehicle sold … was a defective vehicle, sold in a condition which was in breach of the consumer guarantee provided at sections 54 to 57 of the (ACL NSW). The defects were not disclosed to the applicant before the applicant purchased the vehicle … The total cost of testing, parts and repairs to the vehicle was $29,656.50. All repairs were carried out by licensed repairers. The (respondent) has only paid $3,574.50 towards the cost of these parts and repairs. The applicant claims that the total cost of repairs should be borne by (respondent) pursuant to s 58 of the (ACL NSW). The applicant has incurred legal expenses of approximately $3,700.00 and makes a further claim against (the respondent) for these expenses.
6. The applicant's submissions dated 17 November 2017 put a case for relief against the respondent on wider terms than those stated in the application.
7. In fact, the applicant now seeks an order for the respondent to pay money to him in a sum $42,082.00 comprising: 1. $15,000.00 being the 'loss sustained on the sale of the vehicle'; 2. $2,573.35 less $2,000.00 already paid by the respondent in the amount of $573.35 for testing by Ferrari Brisbane; 3. $5,144.45 being the 'cost of inspecting and identifying the defects in the vehicle'; 4. $11,220.00 being the replacement gearbox and associated transportation costs; 5. $10,144.20 being the labour costs associated with the installation of the new gearbox.
8. The applicant's submission dated 17 November concludes (at paragraph 71) with a statement to the effect that the applicant reduces his claim to an order to pay money in the amount of $40,000.00, so as to stay within 'the jurisdictional monetary limit of this Tribunal'. The submission also refers to the orders sought by him on this application as follows: 1. Damages for breach of contract 2. Further or in the alternative, Damages pursuant to section 259(3) of the Competition and Consumer Act - Schedule 2 - Australian Consumer Law; 3. Further or in the alternative, Damages pursuant to section 259(2)(b) of the Competition and Consumer Act - Schedule 2 - Australian Consumer Law; 4. Further or in the alternative, Damages pursuant to section 236 of the Competition and Consumer Act - Schedule 2 - Australian Consumer Law; 5. Costs.

The respondent's case

1. The respondent relied upon the following documents: 1. Affidavit of Anthony Chrisis sworn 20 September 2017; 2. Affidavit of Mr Tran dated 14 August 2017 (received by the Tribunal on 6 October 2017); 3. Written submissions dated 13 November 2017.
2. The respondent supplemented its case at the formal hearing with the sworn oral evidence of Mr Tran (subject to cross examination by the applicant's solicitor), and the sworn oral evidence of Mr Chrisis (subject to cross examination by the applicant's solicitor). The respondent's counsel also made oral submissions.
3. The respondent submitted that the applicant should not be permitted to argue a case outside the parameters of the case put in the application lodged with the Tribunal on 11 April 2017. The respondent's submissions dated 13 November 2017 address the applicant's claim in the amount of $29,782.00 based upon the allegations of contravention of the ACL NSW's consumer guarantees.
4. The respondent denies any contravention of the ACL NSW's consumer guarantees. It says that the applicant's case must fail because the applicant has not discharged his evidentiary onus (i.e. on the balance of probabilities) to establish that the vehicle when sold to the applicant was defective. The respondent submits that the applicant's evidence, including documents dated 11 July 2017 and 29 August 2017 from Ferrari Brisbane, are deficient, or at best, inconclusive, as to the issues of liability and quantum. In particular, it is said the evidence does not establish the nature of the defect which caused the vehicle to stop driving so that it is not known when such defect arose and who caused the defect.
5. Further, the respondent submits that even if the Tribunal accepts that the vehicle was defective when sold to the applicant, the applicant cannot now prove that the respondent is liable for any loss and damage arising from a defect in the vehicle. In this regard, the respondent's case is that at all material times it was ready willing and able to remedy any failure in the vehicle within a reasonable time. It submits that because the applicant did not avail himself of offers made to him for the vehicle to be tested and repaired by the respondent's mechanics, any orders which the Tribunal could make under s 79N of the FTA are not now available to the applicant and that this is so whether the applicant's cause(s) of action arise under the ACL NSW (i.e. for contravention of the consumer guarantees) or under the general law (i.e. for breach of contract).
6. However, the applicant joins issue with the respondent on whether such offers of testing and repair were, in fact, made to him by the respondent's Mr Tran at any time (whether by telephone or SMS) before the applicant's letters of demand to the respondent dated 21 and 30 March 2016.

Should the applicant be permitted to state a case for damages of up to $40,000 as put in the applicant's written submissions dated 17 November 2017?

1. There are no Points of Claim (or formal pleading) which articulate the legal basis of the applicant's cause(s) of action against the respondent and which then state the manner of calculation of the applicant's claim. By his application lodged on 11 April 2017 the applicant sought damages in an amount of up to $29,782.00. The applicant's evidence served prior to the formal hearing, particularly the applicant's affidavit sworn 31 August 2017, provides material to support a claim for damages in that amount.
2. The basis for the relief stated in the application, is the respondent's contravention of the ACL NSW's consumer guarantees in selling a defective vehicle to the applicant and in not disclosing those defects to the applicant before the sale. Part of the applicant's case (see, particularly, the applicant's affidavit) is he was told by the respondent that there was 'nothing wrong with (the vehicle)' and that it was 'beautiful to drive', or words to that effect. From these allegations it can be inferred that in addition to a case for relief under the ACL NSW based upon contravention of the consumer guarantees the applicant also sought relief under the general law (i.e. damages for breach of contract).
3. The applicant's written submissions following the formal hearing put a case for damages of up to $42,082.00 (reduced to $40,000.00, so as to stay within the Tribunal's jurisdictional limit). In addition to a case based on contravention of the ACL NSW's consumer guarantees and general law damages for breach of contract, the applicant also seeks damages pursuant to s 236 of the ACL NSW. That section refers to contravention of provisions of the ACL NSW, other than the consumer guarantees. The remedial provisions for contravention of the ACL NSW's consumer guarantees are found in s 259 and s 260.
4. As the applicant did not file and serve Points of Claim (there was no direction of the Tribunal requiring him to do so), the respondent did not have to provide any Points of Defence. The respondent simply prepared its case for the formal hearing based on the material provided by the applicant prior to the hearing. Such material did not identify a claim for damages of up to $40,000.00. It did not identify any contravention(s) of provisions of the ACL NSW other than the consumer guarantees. For example, the application and the applicant's written evidence did not refer to provisions of the ACL NSW such as s 18 and s 29, as might found a basis for relief by way of damages under s 236 of the ACL NSW.
5. By s 53(1) of the Civil and Administrative Tribunal Act 2013 NSW (the NCAT Act) the Tribunal may at any stage of the proceedings and on such terms as the Tribunal thinks fit amend an application if its considers the amendment "to be necessary in the interests of justice". Section 53(2) says such amendment may be made only after giving notice to the party to whom the amendment relates. The respondent did not have notice of any amendment to the application (whether increasing the amount of the claim and/or adding an additional legal basis for relief under the ACL NSW) at the formal hearing. It now opposes any leave being granted and submits, as indicated earlier, that the applicant should not be permitted to argue a case outside the parameters of the case put in the application lodged with the Tribunal on 11 April 2017.
6. I refuse leave for the applicant to amend its application to a claim for $40,000.00 including an entitlement to damages under s 236 of the ACL NSW. I determine that granting leave is not in the interests of justice in this case. It would be inconsistent with the parties' conduct of the proceedings to the formal hearing including the prior orders and directions made by the Tribunal. Further, it would be procedurally unfair to allow an amendment at such a late stage of the proceedings in circumstances where the application did not state cause(s) of action for contravention of the ACL NSW, other than the consumer guarantee provisions. The respondent prepared its case accordingly. It did not have an opportunity to adduce evidence to respond to a claim with a quantum which exceeded $29,782.00, as stated in the application, or which referred to causes of action based upon allegations of breaches of the ACL NSW other than the consumer guarantee provisions.

Was the vehicle defective?

1. The respondent's principal submission is that the applicant has not discharged the evidentiary onus of proving that the vehicle was defective at the time of sale.
2. I find that the correspondence from Ferrari Brisbane dated 11 July 2017 and 29 August 2017, respectively, carries little evidentiary weight. Such correspondence was provided after Ferrari Brisbane had carried out its own testing and repairs of the vehicle and had charged the applicant for its services (some of the charges being paid by the respondent). The correspondence does not comply with NCAT Procedural Direction 3 for Expert Witnesses. The qualifications of Mr Piva and Mr Turner, respectively, are inadequately referred to, so I cannot be satisfied as to their experience and expertise to give expert evidence. Mr Piva's letter does not refer to the Expert Witness Code of Conduct; whereas Mr Turner's letter simply states that he 'agrees' to be bound by the Code. There is no acknowledgment that Mr Turner has read the Code. Even if such acknowledgment is to be inferred from Mr Turner's statement that he 'agrees' to be bound by the Code, I am not satisfied that Mr Turner when signing the correspondence on 29 August 2017 and stating conclusions he had reached after testing and carrying out repairs to the vehicle in 2016, can be said to have properly understood and appreciated his general duty to the Tribunal to be impartial in assisting the Tribunal in matters relevant to his area of expertise and not to act as an advocate for a party. Further, there is no adequate or sufficient reasoning provided for Mr Turner's conclusions.
3. Nevertheless, I do not accept the proposition that the applicant's case (at least, in establishing the existence of a defect in the vehicle at the time of sale, as opposed to establishing the cause of the defect) must necessarily rely upon expert evidence. By s 38(2) of the NCAT Act the Tribunal is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit subject to the rules of natural justice. The Tribunal is also to act with as little formality as the circumstances of the case of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms: s 38(4).
4. I do not accept the respondent's submission that there is no credible evidence the vehicle was defective at the time of sale. On its own, the correspondence from Ferrari Brisbane dated 11 July 2017 and 29 August 2017, is insufficient to establish the existence of a defect in the vehicle at the time of sale. However, I am satisfied that there are facts and circumstances which together with the reports contained in the Invoices of Ferrari Brisbane dated 15 January 2016 and 1 April 2016 (as set out above), point to there being a defect in the vehicle at the time of sale. There is no evidence of any pre-sale mechanical inspection of the vehicle. I have no reason to doubt the applicant's evidence that he was given positive assurances as to the condition and driveability of the vehicle. I have to have regard to the nature and price of the goods the subject of the sales transaction (i.e. an expensive 'high performance' European sports motor vehicle). I find that sales representatives of the respondent said the vehicle had 'nothing wrong with it' and was 'beautiful to drive' or at least words to that effect. It is not contested that the vehicle stopped and would not re-start on 27 November 2015 (3 days after its delivery by car carrier to the applicant at his Gold Coast home) and again on 17 January 2016 on its way back from Ferrari Brisbane and at a time when the vehicle had been driven 210 kilometres only since the time of sale.
5. Given the proximity to the time of sale and the short distance driven since the sale and delivery of the vehicle by car carrier, I am not persuaded that the applicant's driving of the vehicle was responsible for the vehicle stopping and then not re-starting on 27 November 2017. In the circumstances, I am satisfied that there were issues with the driveability of the vehicle and also that these issues must have existed at the time of sale of the vehicle. They were issues which required testing and repairs including replacement of parts, if required. Accordingly, I find on the balance of probabilities that the vehicle was defective at the time of its sale to the applicant.
6. I now have to determine the remedial consequences of that finding whether under the ACL NSW's consumer guarantee provisions or under the general law.

Remedies for contravention of the ACL NSW's Consumer Guarantees

Jurisdiction

1. On 1 January 2011, the ACL NSW came into force in New South Wales. The ACL NSW replaced the provisions of the FTA which had previously implied conditions and warranties into consumer supply contracts. The repealed provisions of the FTA were replaced with the text of Schedule 2 to the Commonwealth Competition and Consumer Act 2010 referred to as the "Australian Consumer Law". For New South Wales the text of Schedule 2 to the Commonwealth Act was made applicable as a law of New South Wales, the said text is referred to as the ACL NSW and the ACL NSW is a part of the FTA: see s 28 of the FTA.
2. Although some of the facts and circumstances the subject of this application relate to matters occurring in Queensland, the ACL NSW continues to apply because the ACL NSW applies to and in relation to the respondent, a corporation carrying on its business in NSW, and the ACL NSW extends to conduct, and other acts or things, occurring or existing outside or partly outside NSW: s 32 of the FTA.

Whether the respondent contravened the consumer guarantees

1. For his cause of action arising under the ACL NSW, the applicant refers in his application lodged with the Tribunal on 11 April 2017 to sections 54, 55, 56, 57 and 58. These provisions are within Part 3-2 of the ACL NSW.
2. I find that no reasonable cause of action is disclosed in respect of alleged contraventions of sections 56, 57 and 58 of the ACL NSW.
3. Section 56 concerns a statutory guarantee that goods supplied (in this instance, the vehicle) correspond with the description provided. It is the identity of the goods supplied which is relevant in the context of this provision, not the quality or specification of the goods: Christopher Hill Ltd v Ashington Piggeries Ltd [1972] AC 441, 503-4. This consumer guarantee does not apply in the circumstances.
4. There is no dispute that the vehicle which was identified by the applicant as the vehicle he wanted to purchase was the same vehicle which was delivered by the respondent to the applicant on 24 November 2015.
5. Section 57 requires that where goods are supplied to a consumer by reference to a sample or demonstration model that the goods correspond with the sample or demonstration model in quality, state or condition.
6. Again, this consumer guarantee does not apply in the circumstances. There is no dispute that the vehicle which was sold to the applicant was the same vehicle which the applicant took for a test drive prior to purchase.
7. The applicant's reference in his application to s 58 of the ACL NSW is misconceived. That section is not a remedial provision; it simply provides that where goods are supplied there is a guarantee that the manufacturer of the goods will take reasonable action to ensure that repair facilities and parts for the goods are reasonably available for a reasonable period of time. For reasons referred to below I am satisfied that at all material times the respondent was ready willing and able to make good any deficiency in the vehicle including covering the cost of transporting the vehicle to NSW for inspection and any necessary repairs.
8. I have already found that the vehicle was defective at the time of sale in that there were issues which required testing and repairs. I have also found that these issues adversely affected the driveability of the vehicle such that it stopped and would not re-start within three days of its delivery to the applicant by car carrier. The consequence of my findings is that the vehicle (within the description of goods supplied in trade or commerce - see s 2 and s 3 of the ACL NSW) was not, at the time of sale, 'fit for all the purposes for which goods of that kind are commonly supplied' (s 54(2)(a)) and also was not 'free from defects' (s 54(2)(c)).
9. Therefore, there was a supply of goods by the respondent to the applicant which was in contravention of the consumer guarantee as to acceptable quality (s 54). As indicated earlier, I am not satisfied there is sufficient evidence to establish that any defect in the vehicle when it stopped and would not re-start on 27 November 2015 was attributable to any reasonable steps not taken by the applicant or otherwise caused by any abnormal use of the vehicle by the applicant: s 54(6).
10. I further find that the vehicle was supplied by the respondent to the applicant in trade or commerce in contravention of the consumer guarantee in s 55 of the ACL NSW. A 'disclosed' purpose, with particular characteristics beyond the ordinary use of a motor vehicle, does not arise in the circumstances. The applicant took the vehicle for a test drive before he purchased it. There can be no doubt that the applicant required the vehicle for driving on public roads. As I have already found that there were existing issues with the vehicle which adversely affected the vehicle's driveability when it stopped and would not re-start on 27 November 2015, it follows that the vehicle was not reasonably fit for the purpose it had been supplied to the applicant.

The Remedial Provisions of the ACL NSW available to the applicant arising from the respondent's contravention of the consumer guarantees in s 54 and s 55

1. A failure to comply with a consumer guarantee in Part 3-2 (other than s 66(2)) is not taken to constitute a contravention of the ACL NSW: s 15 of the ACL NSW.
2. The general remedial provisions of the ACL NSW as set out in Part 5-2, including s 236, depend in most instances on there being a contravention of designated Parts of the ACL NSW. Because of s 15, the respondent's failure, as in this instance, to comply with the consumer guarantees in s 54 and s 55 in respect of the sale transaction for the vehicle, does not constitute a contravention which attracts the general remedial provisions of the ACL NSW found in Part 5-2, ss 224 - 253. Accordingly, there is no right available to the applicant to recover damages under s 236 or other compensatory orders, under s 237 and s 243 of the ACL NSW, including orders for a refund (s 243(d)).
3. The remedial provisions of the ACL NSW which apply for the respondent's failure to comply with the consumer guarantees as to acceptable quality (s 54) and fitness for purpose (s 55), are contained in Part 5-4, ss 259 - 277.
4. Section 259 establishes that a consumer can, where applicable consumer guarantees have not been complied with, require the supplier to remedy the failure, recover by action certain amounts in various circumstances or reject the goods in certain circumstances. The section states: 259 Action against suppliers of goods (1) A consumer may take action under this section if: (a) a person (the supplier) supplies, in trade or commerce, goods to the consumer; and (b) a guarantee that applies to the supply under Subdivision A of Division 1 of Part 3-2 (other than sections 58 and 59(1)) is not complied with. (2) If the failure to comply with the guarantee can be remedied and is not a major failure: (a) the consumer may require the supplier to remedy the failure within a reasonable time; or (b) if such a requirement is made of the supplier but the supplier refuses or fails to comply with the requirement, or fails to comply with the requirement within a reasonable time--the consumer may: (i) otherwise have the failure remedied and, by action against the supplier, recover all reasonable costs incurred by the consumer in having the failure so remedied; or (ii) subject to section 262, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection. (3) If the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may: (a) subject to section 262, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection; or (b) by action against the supplier, recover compensation for any reduction in the value of the goods below the price paid or payable by the consumer for the goods. (4) 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. (5) Subsection (4) does not apply if the failure to comply with the guarantee occurred only because of a cause independent of human control that occurred after the goods left the control of the supplier. (6) To avoid doubt, subsection (4) applies in addition to subsections (2) and (3). (7) The consumer may take action under this section whether or not the goods are in their original packaging.
5. Determining a consumer's options under s 259 depends on whether or not the failure to comply is a 'major failure'. A failure to comply with consumer guarantee(s) may be a 'major failure' for at least five different reasons: 260 When a failure to comply with a guarantee is a major failure A failure to comply with a guarantee referred to in section 259(1)(b) that applies to a supply of goods is a major failure if: (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. Was there a 'major' failure in this case?
6. For there to be a 'major failure' it is not necessary for the applicant to establish each of the five matters (a) to (e) as set out in s 260 of the ACL NSW. Establishing one is sufficient.
7. Subsection (d) of s 260, where goods are unfit for a disclosed purpose, only applies when there have been specific negotiations about purpose between a consumer and supplier. There is no evidence of any disclosed purpose arising from specific negotiations between the parties in this case. Similarly, s 260(b) does not apply in the circumstances of this case. The vehicle was not supplied by description; nor was the vehicle a sample or demonstration model.
8. Subsections (a) and (e) of s 260 are linked to the consumer guarantee as to acceptable quality (s 54); whereas subsection (c) is apposite to the consumer guarantee of fitness for purpose (s 55) as well as s 54. Relevantly, s 54 requires that, among other things, goods be "fit for all the purposes which goods of that kind are commonly supplied", "free from defects" and "safe". These standards are to be regarded by the "reasonable consumer fully acquainted with the nature and extent of (any) failure" of the goods.
9. The applicant's case for a 'major failure' relies principally upon s 260(a). He argues that a 'reasonable consumer' purchasing a Ferrari for $210,000.00 described as having 'nothing wrong with it' and being 'a beautiful car to drive' (or words to that effect) would not have done so knowing that the vehicle would stop and not re-start within the first 9.5 kilometres of driving and within three days of delivery by a car carrier to his Gold Coast home.
10. The authorities consistently establish that the 'reasonable consumer' for the purposes of s 260 is assessed as an objective test. In Safi v Heartland Motors t/as Heartland Chrysler [2016] NSWCATAP 80 (11 April 2016), the Appeal Panel, after reviewing relevant authorities in Australian and New Zealand courts and tribunals on the question of how s 260 (or its NZ equivalent) is to be interpreted and applied, said: 98 In our view, Goldiwood and Stephens v Chevron go too far insofar as they find that the failure to comply with the guarantee of acceptable quality will always be a major failure (or failure of substantial character). While there are similarities in the legislative tests to be applied, whether non-compliance is a major failure will depend on the nature and extent of the failure. For instance, it is possible that goods may not be of acceptable quality at a given point of time, either because they are not fit for purpose or have defects, but they may be capable of becoming acceptable because the defects can be remedied easily and in a timely manner. Non-compliance would therefore not amount to major failure because a reasonable consumer would be prepared to accept teething problems that can be fixed under warranty. 99 This was the approach taken in Norton v Hervey Motors Ltd [1996] DCR 427. In this case the court held that the "reasonable consumer" should be assessed as a purely objective test. It was also noted that a reasonable consumer would expect there would be some problems with a motor vehicle but would be unlikely to acquire a defective vehicle if they knew at the time of purchase another identical vehicle was available for purchase. This was discussed by K Tokeley, Consumer Law in New Zealand, (2nd ed 2014, Lexis Nexis NZ Limited) at 102-103, as being unduly narrow. The author posited an alternative formulation as follows: Therefore when applying s 21(1)(a) it makes more sense to ask whether reasonable consumers, given the option of acquiring that particular good or alternatively purchasing either nothing or a different model, would have acquired the good if they had been aware of the nature and extent of the failure. In this way the focus is on whether the failure was so bad that the consumers would never have bought the good if they had been aware of it, or whether the failure is less significant and consumers would have been prepared to accept the good even knowing its faults. 100 We accept that this is a more common sense approach, particularly given the ACL (NSW) is beneficial legislation. 101 Having regard to these cases and the commentary, where there is non-compliance with the guarantee of acceptable quality, as alleged in this case, we find that the following matters will be relevant to the question of whether this amounts to a "major failure" under s 260(a): (1) A major failure may be constituted by one defect or a series of specific or individual defects which, when taken as a whole, constitute a major failure; (2) The test of whether the goods "would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure" is an objective one; (3) A "reasonable consumer" would expect teething problems, even in a new vehicle; (4) The question to ask is whether the reasonable consumer, given the option of acquiring that particular good or alternatively purchasing either nothing or a different model, would not have acquired the good; (5) Defects which result in goods failing to comply with the guarantee of acceptable quality will not invariably be a major failure and it will depend on the nature and extent of the failure; and (6) The cost of repair, in proportion to the purchase price, and the question of whether the defects can be remedied easily in a timely manner are relevant considerations. 102 In our view, the purchase price for the goods and the nature of the defect are also relevant considerations for a "reasonable consumer".
11. In the particular circumstances of this case, I am not persuaded that the issues with the vehicle which caused it to break down and fail to re-start on 27 November 2015 amount to a 'major failure'. The evidence as to the cause of the failure of the vehicle on 27 November 2015 is inconclusive. The correspondence of 11 July 2017 and 29 August 2017 from Ferrari Brisbane is inadequate as a matter of substance. Any issue with the gearbox of the vehicle including whether it had to be replaced or not, is very superficially dealt with in that correspondence. Mr Piva of Brisbane Ferrari also concedes: It is also their shared opinion that it would be too much speculative to determine the cause of the failure without knowing the complete driving usage of the vehicle.
12. By contrast, in the affidavit of Mr Frasca at paragraph 2, also relied upon in the applicant's case, Mr Frasca says he performed an examination of the vehicle after it broke down on 27 November 2015 which: Led me to believe there was a problem with the Vehicle's actuator which is a common fault for this type of vehicle. I recommended that Mr Halilovic take the Vehicle to Ferrari in Brisbane and Mr Halilovic then made arrangements to collect the Vehicle.
13. As I am not persuaded that the applicant's evidence establishes the cause of the breakdown of the vehicle in November 2015, the nature and extent of the failure of the vehicle is not known. I cannot be satisfied that the breakdown of the vehicle in this case is capable of being characterised as a 'major failure' for the purposes of s 260 of the ACL NSW.
14. Nor am I satisfied that replacement of the vehicle's gearbox (a costly course of action) was a reasonable solution to address issues with the vehicle which had resulted in the vehicle stopping and not re-starting. In this regard, I accept the evidence of the respondent's expert, Mr Chrisis, who highlighted the problems with the applicant's case at paragraphs 16 and 17 of his Affidavit sworn 20 September 2017: 16. In my professional experience, I believe the warranting dealer, in this case prestige Motor Haus Sydney, would have requested that the transmission be dismantled for further analysis of the internal components or that more information be provided in order to justify a replacement transmission. In other words, the usual process in these situations is to provide more detailed diagnosis prior to proceeding to the costly solution of an entire replacement. 17. None of the material that I have been provided with, gives me the confidence to accept the faults alleged by the Applicant existed, nor can I refute them in circumstances that the vehicle has been sold and the transmission removed.
15. For those reasons I find that the respondent's failure to comply with the consumer guarantees as to acceptable quality (s 54) and fitness for purpose (s 55) of the vehicle did not amount to a 'major failure' within the meaning of s 260 of the ACL NSW.

Whether the respondent made offers to repair the vehicle within reasonable time

1. Accordingly, the applicant's remedy for breaches of the consumer guarantees in s 54 and s 55 is under s 261 of the ACL NSW. This is because the failure to comply with those guarantees could be remedied and was not a 'major failure': s 259(2).
2. Section 261 of the ACL NSW specifies various ways in which a supplier may remedy a failure in response to a requirement made by a consumer under s 259(2)(a). These include: repairing the goods; replacing the goods with goods of an identical type or refunding the money paid for the goods and an amount equal to any other consideration provided.
3. Pursuant to s 259(2)(a) or (b) of the ACL NSW the applicant was entitled to require the supplier of the vehicle (the respondent, in this instance) to remedy the failure within a reasonable time, or if such a requirement was made of the supplier but the supplier refused to comply then the applicant could proceed to 'otherwise have the failure remedied and seek to recover all reasonable costs': s 259(2)(b)(i).
4. In essence, the applicant's claim, as put in the application lodged with the Tribunal on 11 April 2017, is to seek to recover 'all reasonable costs'. This assumes a Tribunal finding that the respondent was required to remedy the failure with the vehicle within a reasonable time and that the respondent refused to comply.
5. The applicant relies upon his solicitors' letters of 21 and 30 March 2017 requiring the respondent to pay for repairs of the vehicle to be completed by Ferrari Brisbane or for the vehicle to be transported to the respondent in exchange for the purchase price for the vehicle being refunded. He argues that the respondent's lack of response to the letters of demand constitutes the respondent's failure to remedy within a reasonable time and that this validates the applicant's claim to recover his 'reasonable costs' to rectify the issues causing the failure of the vehicle.
6. I do not accept in the events which occurred following delivery of the vehicle to the applicant on 24 November 2015 that the respondent refused to comply with any requirements of the applicant to remedy issues with the vehicle which were causing the vehicle to break down.
7. I am satisfied that there were telephone conversations between the applicant and the respondent's Mr Tran in December 2015 and February 2016 during which the respondent offered to pay for the vehicle to be transported back to NSW so that the respondent's mechanics could undertake testing and repairs to deal with any issues causing the vehicle to break down: see paragraphs 15, 16, and 19 of the affidavit of Mr Tran sworn 27 September 2017.
8. The applicant denied that these conversations took place. The applicant's denial does not sit comfortably with what was put on his behalf in the solicitors' letter of 30 March 2016 (see annexure BH - 2 to Mr Hatswell's affidavit of 6 November 2017): We note that you have offered to our client to fix it under the warranty provisions of the Motor Dealers and Repairers Act 2013.
9. I am satisfied that Mr Tran presented as a reliable witness of fact during his cross examination at the formal hearing on 7 November 2017. He also presented as an authorised motor dealer well aware of the respondent's responsibilities under the ACL NSW. In this respect, the Form 5 Motor Dealer's Notice for Motor Vehicles (annexure EH - 4 at page 14 of the applicant's affidavit) states below the signed Consumer acknowledgment: NOTE: This vehicle comes with guarantees that cannot be excluded under the Australian Consumer Law. You are entitled to a replacement or refund for a major failure and compensation for any other reasonably foreseeable loss and damage. You are also entitled to have the goods repaired or replaced if the goods fail to be of acceptable quality and the failure does not amount to a major failure.
10. Mr Tran's recollection of the respondent's offers to the applicant to do repairs on the vehicle in NSW is also consistent with Mr Tran's SMS correspondence to the applicant in March 2016 (as referred to within annexure EH -15 at page 48 of the applicant's affidavit) where Mr Tran writes: "Just let me fix the car and have this issue resolved so you can enjoy the car", and also in May 2016 (as referred to within annexure EH - 15 at page 63 of the applicant's affidavit), where Mr Tran writes: "Well what are we doing I told you to send me the car". To the extent there are differences between Mr Tran and the applicant as regards their recollection of telephone conversations in 2015 and 2016, I prefer the evidence of Mr Tran.
11. The applicant also contended that the respondent consented to repairs being carried out in Brisbane because it made more 'business sense' for the repairs to be carried out there given high Brisbane/Sydney transportation costs. I do not regard Mr Tran's actions in arranging for the respondent to pay $574.50 to Maranello in December 2015 and to pay $2,000.00 to Ferrari Brisbane in January 2016 as amounting to 'consent' for other repairers to take the place of the respondent in fulfilling the respondent's statutory responsibility to comply with the applicant's requests for compliance with the consumer guarantees in respect of the vehicle. In fact, these payments were made in the context of the applicant's actions (presented to Mr Tran during telephone conversations as a fait accompli) that his own repairers would carry out assessment and repairs of the vehicle, notwithstanding the respondent's offers to have the vehicle transported back to NSW so that its mechanics could do the testing and any necessary repairs to the vehicle.
12. I find that at all material times the respondent was ready willing and able to remedy any failure in the vehicle and to take the actions required of it by s 261 of the ACL NSW including repair of the vehicle. Other than payments of $574.50 and $2,000.00, respectively, to repairers who had been retained on the applicant's insistence, the respondent was not afforded the opportunity to take its own remedial action on issues with the vehicle which arose soon after its delivery to the applicant. The applicant's reliance upon the solicitors' letters of 21 and 30 March 2016 does not take into account the fact that the respondent made offers during the period from December 2015 to May 2016 to carry out its own testing and repairs of the vehicle. This is a material consideration given the Tribunal's finding that the evidence as to the cause of the breakdown of the vehicle in November 2015 is inconclusive.
13. In the circumstances, it cannot be said that the respondent supplier 'refused' or 'failed to comply' with a consumer's request within the meaning of s 259(2)(b). Therefore, the applicant has no remedy under s 259(2)(b)(i) of the ACL NSW for recovery of his 'reasonable costs'.

Remedies at General Law for Breach of Contract

1. The applicant also puts a claim at general law for breach of contract being his reasonable costs (up to $29,782.00) arising from the supply to him of a defective vehicle.
2. It is well established that damages for breach of contract cannot be recovered for any loss which could have been prevented by reasonable mitigation action taken by the injured party.
3. Moreover, a loss which is attributable to a failure to mitigate can be regarded as an aspect of causation of loss: see, for example, Castle Constructions Pty Ltd v Fekula Pty Ltd [2006] NSWCA 133, [21].
4. In Sotoris Shipping Inc and Aeco Maritime S.A. v Sameiet Solholt (The 'Solholt') (1983) 1 Lloyds Rep 606, Sir John Donalson M.R. stated: A plaintiff is under no duty to mitigate his loss, despite the habitual use by the lawyers of the phrase "duty to mitigate". He is completely free to act as he judges to be in his best interests. On the other hand, a defendant is not liable for all loss suffered by the plaintiff in consequence of his so acting. A defendant is only liable for such part of the plaintiff's loss as is properly to be regarded as caused by the defendants' breach of duty. As Viscount Haldane, L.C., put it in British Westinghouse Electric and Manufacturing Co. Ltd. v. Underground Electric Railways Co. of London Ltd, [1912] A.C. 673 at p. 689: The fundamental basis is thus compensation for pecuniary loss naturally flowing from the breach; but this first principle is qualified by a second, which imposes on a plaintiff the duty of taking all reasonable steps to mitigate the loss consequent on the breach, and debars him from claiming any part of the damage which is due to his neglect to take such steps.
5. My findings, in the context of consideration of the applicant's claim for relief under the ACL NSW, are also apt to the applicant's claim for breach of contract. At all material times, the respondent was ready willing and able to take such remedial action as may have been required to address the issues with the vehicle which had caused it to break down in November 2015. Apart from accepting the respondent's offers to pay $574.50 to Marenello and $2,000.00 to Ferrari Brisbane the applicant acted unilaterally by engaging other repairers and taking the course of having the gearbox replaced at significant cost. It is now these costs incurred by the applicant with other repairers and for the replacement of the gearbox which are sought to be recovered from the respondent. They are costs which would not have been incurred by the applicant if he had taken up, in December 2015, Mr Tran's offers for the respondent's mechanics to carry out testing and repairs in order to make good the vehicle so that what had caused it to break down on 27 November 2015 did not re-occur.
6. The respondent's arguments about mitigation and causation are in effect the same argument. I accept those arguments. In the circumstances, I am not satisfied that the applicant has made out a case of damages for breach of contract in an amount of $29,782.00 or any lesser amount.

Costs

1. The respondent seeks an order for its costs. It submits that the applicant's case lacked substance (see paragraph 22(a) of respondent's written submissions dated 13 November 2017) and that the applicant's (or his lawyers') conduct of the case throughout the proceedings was 'problematic, improper and unreasonable' (see paragraph 76 of the respondent's written submissions).
2. An award of costs is discretionary. The usual proposition in litigation is that an unsuccessful party pays the costs of the successful party. However, the proposition that costs follow the event is substantially varied by s 60 of the NCAT Act, cl 10(2) of Sch4 of the NCAT Act and Rule 38 of the Civil and Administrative Tribunal Rules 2014 (NCAT Rules).
3. Section 60 of the NCAT Act provides: (1) Each party to proceedings in the Tribunal is to pay the party's own costs. (2) The Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs. (3) In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following: (a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings, (b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings, (c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law, (d) the nature and complexity of the proceedings, (e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance, (f) whether a party has refused or failed to comply with the duty imposed by section 36 (3), (g) any other matter that the Tribunal considers relevant. (4) If costs are to be awarded by the Tribunal, the Tribunal may: (a) determine by whom and to what extent costs are to be paid, and (b) order costs to be assessed on the basis set out in the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014) or on any other basis. (5) In this section: costs includes: (a) the costs of, or incidental to, proceedings in the Tribunal, and (b) the costs of, or incidental to, the proceedings giving rise to the application or appeal, as well as the costs of or incidental to the application or appeal.
4. Rule 38 of the NCAT Rules relates to costs in this Division of the Tribunal, the Consumer and Commercial Division. Rule 38(2) says that despite s 60 of the NCAT Act the Tribunal may award costs in the absence of special circumstances warranting such an award if the amount claimed is more than $10,000.00 but not more than $30,000.00 and the Tribunal has made an order under cl 10(2) of Sch4 of the NCAT Act in relation to the proceedings, or the amount claimed or in dispute in the proceedings is more than $30,000.00.
5. As I declined leave for the applicant to amend his application to a claim for $40,000.00, these proceedings were heard on the basis of the applicant's application lodged on 11 April 2017, which sought an amount of $29,782.00. I make no order under cl 10(2) of Sch4 of the NCAT Act. I am not satisfied that the applicant conducted this proceeding in such a way that unreasonably disadvantaged the other party. While the applicant was ultimately unsuccessful in these proceedings, that did not arise from any failure to comply with an order or direction of the Tribunal. The respondent complained that the applicant's case was not properly pleaded. However, the applicant's failure to plead or 'particularise' his claim is not, in itself, an abuse of process, considering, as already referred to, what s 38(4) of the NCAT Act says about the substantial merits of a case without regard to legal technicalities and forms. In any event, the respondent could have sought interlocutory orders and directions regarding Points of Claim (or other clarification of issues in dispute) when the proceedings were listed for directions.
6. Even if it is accepted that the applicant did not 'properly plead' a claim whether at general law or under the ACL NSW, this circumstance did not prevent the respondent from retaining its own expert, Mr Chrisis, and then having Mr Chrisis provide an expert report which highlighted the evidentiary deficiencies in the applicant's case, particularly as regards the cause of the vehicle breaking down in November 2015. As Mr Chrisis' expert evidence was accepted by the Tribunal, it is difficult to see how the respondent was unfairly disadvantaged.
7. Accordingly, I find that no case for an order for costs arises against the applicant under Rule 38 of the NCAT Rules.
8. The respondent submitted that there are 'special circumstances' warranting an order for costs against the applicant under s 60 of the NCAT Act in this proceeding. The respondent argued that the applicant's case was not tenable and fatally flawed particularly having regard to its evidentiary deficiencies as to the cause of the vehicle breaking down in November 2015. I am not persuaded by those submissions. It was reasonably open to the applicant to bring his claim. The vehicle was defective at the time of sale. The applicant's claim failed because I made findings adverse to the applicant on legal issues including mitigation and causation of loss. I also made findings of fact and law which had the consequence that there was no remedy available to the applicant under the ACL NSW in the particular circumstances of this case. I would not stigmatise the applicant's application as being hopeless and having no tenable basis in law and lacking in substance.
9. That the respondent was successful in this proceeding does not, in itself, amount to 'special circumstances' within the meaning of s 60 of the NCAT Act. The authorities consistently state that 'special circumstances' are circumstances that are out of the ordinary; although they do not have to be extraordinary or exceptional circumstances: see, for example, Mergerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120; CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21.
10. I am not satisfied that there are 'special circumstances' which warrant the making of a costs order against the applicant.
11. Accordingly, my determination on the respondent's application for costs is that consistent with s 60(1) of the NCAT Act each party is to bear their own costs of this proceeding.

Conclusion and Orders

1. The applicant has failed to make out a case for any relief at general law or under the ACL NSW based on contravention of the consumer guarantees.
2. The respondent is not entitled to any costs' order.
3. My orders are: 1. Leave to amend the application is refused; 2. The application is dismissed; 3. No order as to costs (with the intent that each party is to bear their own costs of the application). DG Charles Senior Member Civil and Administrative Tribunal of NSW 19 January 2018

I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Registrar 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: 28 March 2018