This is a dispute as to whether a Land Rover Discovery vehicle manufactured by the first respondent ('the manufacturer') and sold and serviced by the second respondent ('the dealer') is of acceptable quality and/or has a 'major failure' in breach of the relevant consumer guarantee provisions in the Australian Consumer Law 2010 (NSW) ('the ACL').
The vehicle was sold on 21 April 2016 by the dealer to the applicant. It remains owned by the applicant. As of January 2021, it had travelled approximately 45,000 klms. The sale price of the vehicle was $72,199. The vehicle remains owned by the applicant.
Proceedings were commenced in the Tribunal on 17 January 2021. The applicant seeks a return of the vehicle and refund of the purchase price or in the alternative the replacement of the vehicle.
The matter was listed before the Tribunal on 16 February 2021 for conciliation and directions hearing. It was set down for a special fixture hearing, with directions regarding the filing and serving of documentary evidence.
The hearing was listed on 19 May 2021. 90 minutes had been allocated by the Tribunal for the hearing. The hearing was conducted by telephone.
Ms Jones, the business manager of the applicant and wife of the sole director of the applicant, appeared for the applicant. Ms Rehman, Team Leader Customer Relations, appeared for the manufacturer. Mr Casey, Service Manager, appeared for the dealer.
At the outset of the hearing, all parties indicated they were ready to proceed and did not seek an adjournment for any reason. The parties were informed that if they sought an adjournment for any reason during the course of the hearing, they should raise that issue and it would be dealt with.
At the commencement of the hearing, the applicant stated that the respondents had not complied with directions because they had not had the vehicle inspected by an expert witness.
The Tribunal pointed out that the relevant direction was that the respondents could have the vehicle inspected if they wished to, and if so the applicant would need to make the vehicle reasonably available for inspection. There was no direction compelling the respondents to have the vehicle inspected by an expert witness; and it was the decision of the respondents whether or not they wished to do so.
The manufacturer stated at the commencement of the hearing that there was a jurisdiction issue by reason of the vehicle being purchased by a business, and whether it was being used substantially for private purposes. This issue will be dealt with later in the decision.
Neither party had the vehicle inspected by an independent expert witness. The documentary evidence relied upon by all parties was the service history of the vehicle and emails between the parties regarding the vehicle and its reliability issues.
Ms Jones gave oral evidence at the hearing and the respondents were given the opportunity to question her. There was no cross examination of Ms Jones. Neither of the respondents gave evidence, but relied upon the service history of the vehicle and the emails between the parties that comprised the documentary evidence of the parties.
[2]
Applicant's Evidence
The evidence of the applicant is summarised as follows:
The applicant is a company that operates a welding business. The vehicle was purchased by the company. The company is a small business. Mr Jones, the sole director, has another work vehicle that he uses on a day to day basis to visit work sites. The Land Rover Discovery was used primarily by Ms Jones. She used the vehicle for on a day to day basis to attend clients and potential clients in her capacity as business manager. The vehicle was also used for family activities such as dropping children off to school and picking them up; family errands on weekends; and family holidays. The vehicle was parked at the applicant's house, which is the same address the applicant operates its business.
Ms Jones estimated that the vehicle was used "50% of the time" for business purposes; and "50% of the time" for private purposes.
Over the years, the vehicle has had reliability issues.
On 16 January 2017 it was serviced. A number of minor issues were discovered, which were rectified. There were approximately 9 issues, including the air-conditioning not working. The issues were rectified and the vehicle available to be picked up the same day.
On 16 May 2017 the battery of the vehicle was flat and it was towed to the dealer. The battery was replaced, but the electronics of the vehicle required re-setting. According to the applicant, it was at the dealership for 6 days.
On 6 November 2018 a significant issue occurred. The vehicle was towed the dealer. The replacement battery had leaked onto the transmission control unit. This involved significant repairs to the engine bay and replacement of parts. The vehicle was off the road until the end of December 2018. The applicant was provided with a replacement vehicle during this period.
A short period of time after the vehicle was returned to the applicant in late December 2018 it went into 'limp mode' when the applicant and her family were travelling out of Sydney on holiday to the South Coast of NSW. It was again towed to the dealer were it was found the intercooler boost hose was not connected correctly. The fault was rectified in a short period of time, but as the applicant and her family were on holiday they picked up the car from the dealer on about 2 January 2019. According to the applicant, the vehicle was being repaired (or had been at the dealership) for a total period of 59 days between 6 November 2018 and 2 January 2019.
In February 2019 the respondents refunded the applicant $2,332 which was the cost of an extended warranty that the applicant had taken out on the vehicle previously. The respondents also agreed to provide the following 2 services of the vehicle free of charge.
There were then no further issues with the vehicle until January 2021.
On 1 January 2021, the vehicle went into "restricted performance mode" when Mr Jones was driving the vehicle with his daughter. It was towed back to the dealer. The dealer found that a "turbo vane accentuator" was stuck, and the turbocharger needed to be replaced. This work was performed. It took 32 days before the vehicle was returned. The applicant was provided with a replacement vehicle, but this took a number of days as there was a dispute between the parties about the vehicle to be provided.
Since February 2021, the applicant has had possession of the vehicle and the vehicle has been used normally.
From the break down in January 2021, the applicant has sent correspondence to the respondents stating the vehicle is a "lemon" and seeking a return and refund or replacement of the vehicle.
It appears the extended manufacturer's warranty expired in about May 2021.
The respondent submitted that there had been some delays in completing repairs in the respect of the incidents in November 2018 and January 2021, but this was caused by reasons including that parts were required from overseas. The respondent submitted that the vehicle was of acceptable quality and repairs had been performed under warranty within a reasonable period of time, with a courtesy vehicle being provided to the applicant.
[3]
Jurisdiction of the Tribunal
The Tribunal's jurisdiction derives from Part 6A of the Fair Trading Act 1987 (NSW) ('the FTA').
Under s 79 S of the FTA, the Tribunal has, for most matters, jurisdiction in consumer claim proceedings to make orders to the value of $40,000.
However, there is a relevant exception in respect of a new motor vehicle that is "used substantially for private purposes within the meaning of the Motor Vehicle Taxation Act 1988" (s 79S (6) (a) of the FTA). The Tribunal has an unlimited monetary jurisdiction in respect of such new motor vehicles that are used substantially for private purposes.
Under s 3 (2) (f) of the Motor Vehicle Taxation Act 1988 (NSW) a vehicle is not a "motor vehicle used substantially for private purposes" unless it is used "for social or domestic purposes or for pleasure and in the opinion of Transport for NSW its use for any other purpose is minimal".
Under s 3 (3) of the Motor Vehicle Taxation Act 1988 (NSW), unless Transport for NSW determines otherwise in a particular case or class of cases, "a motor vehicle is not used substantially for private purposes if it is registered otherwise than in the name of a natural person or natural persons".
No evidence was provided as to whether the vehicle was registered in the name of the applicant, or registered privately. However, it was clearly purchased in the name of a corporate entity.
On the evidence of Ms Jones, who state the vehicle is used "50%" for business purposes and "50%" for private purposes; the Tribunal is not satisfied that its business use was "minimal" pursuant to s 3 (2) (f) of the Motor Vehicle Taxation Act 1988 (NSW). On the basis of the oral evidence of Ms Jones at the hearing, the Tribunal is satisfied that it was used substantially for business purposes rather than substantially for private purposes.
Accordingly, it is not a "new motor vehicle" within s 79 S (6) (a) of the FTA because it is not used "substantially for private purposes" within the meaning of the Motor Vehicle Taxation Act 1988 (NSW).
As the applicant is seeking orders that are to an amount exceeding $40,000 the Tribunal has no jurisdiction in the matter. No alternative order was sought that the Tribunal order the vehicle be further repaired, or award damages for the loss of value of the vehicle in comparison to an equivalent vehicle of the same make, model, age, and kilometres travelled. In other words, there was no order sought that was within the $40,000 jurisdictional limit of the Tribunal.
Otherwise, the claim falls within Part 6A of the FTA, as the applicant is a "consumer" within the meaning of Section 79D of the FTA and the claim is a "consumer claim" within the meaning of Section 79E of the FTA
The Tribunal proceedings are also within the 3 year period from the cause of action to file proceedings in the Tribunal under s 79L of the FTA as the applicant only became reasonably aware that the faults in the vehicle were of sufficient duration and severity to reject the goods after the issue in January 2021. From that point in time, both by way of emails and taking proceedings in the Tribunal, the applicant made clear that it regarded the vehicle as not being of acceptable quality and it was rejecting the goods (Barbour v Autosports Five Dock Pty Ltd [2020] NSWCATAP 141).
However, if the Tribunal is wrong about its findings on the issue of jurisdiction, it is appropriate to go on to consider whether or not the applicant has established breach of the relevant consumer guarantee provisions of the ACL.
There is an issue as to whether the applicant is a "consumer" within the definition of s 3 (1) of the ACL (and thus invoking the consumer guarantee provision of the ACL) because the relevant applicable definition is the definition in s 3 (1) (b) that the "goods were of a kind ordinarily acquired for personal, domestic or household use or consumption" in circumstances where the vehicle was purchased by a corporate entity and was used 50% of the time for business purposes.
However, it is unnecessary to further explore that issue because, for reasons explained below, the Tribunal is not satisfied the applicant has established that there was a breach of the relevant consumer guarantee provisions in any event.
[4]
Relevant Legal Principles
By reason of ss 28 and 32 of the FTA, the ACL is a law of NSW.
The relevant consumer guarantee provisions in this matter are:
1. Section 54-Guarantee that goods are of acceptable quality
2. Section 55-Guarantee for fitness for any disclosed purpose.
3. Sections 259-263 of the ACL-If goods are not of acceptable quality; have a "major failure"; the consumer rejects the goods within a reasonable period of time; and the goods are returned or made available for collection by the supplier or goods or manufacturer, the consumer is entitled to a refund or replacement of the goods.
The relevant legal principles concerning the consumer guarantee provisions of the ACL have been discussed by the Appeal Panel in a number of cases, including Safi v Heartland Motors Pty Ltd t/as Heartland Chrysler [2016] NSWCATAP 80 ('Safi'); and LSH Auto (Sydney) Pty Ltd v Sherman [2020] NSWCATAP 246 ('Sherman'). Such authorities primarily deal with ss 54 and 259-263 of the ACL.
In respect of such authorities, relevantly:
1. Whether goods are of acceptable quality (and whether they have a "major failure") involves an objective, not a subjective test. Subjective dissatisfaction with the goods is not sufficient to prove a breach of the consumer guarantee provisions.
2. A reasonable consumer, full acquainted with potential faults, would understand that no purchase of goods is completely risk free, understanding that teething problems and other problems may be addressed under warranty.
3. The absence of an independent expert report goes to the weight of evidence, and the absence of such a report does not mean, of itself, that a consumer cannot establish that goods are not of acceptable quality (or have a "major failure").
4. In respect of the purpose of the goods have been purchased for, "roadworthiness" means fit for use on the roads and is synonymous with "safe".
5. A serious of faults or defects over a period of time may be sufficient to prove objectively that the goods are not of acceptable quality and have a "major failure".
Section 54 of the ACL relevantly states as follows:
54 Guarantee as to acceptable quality
(1) If:
(a) a person supplies, in trade or commerce, goods to a consumer; and
(b) the supply does not occur by way of sale by auction;
there is a guarantee that the goods are of acceptable quality.
(2) Goods are of acceptable quality if they are as:
(a) fit for all the purposes for which goods of that kind are commonly supplied; and
(b) acceptable in appearance and finish; and
(c) free from defects; and
(d) safe; and
(e) durable;
as a reasonable consumer fully acquainted with the state and condition of the goods (including any hidden defects of the goods), would regard as acceptable having regard to 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.
…
Section 55 of the ACL states:
55 Guarantee as to fitness for any disclosed purpose etc.
(1) If:
(a) a person (the supplier) supplies, in trade or commerce, goods to a consumer; and
(b) the supply does not occur by way of sale by auction;
there is a guarantee that the goods are reasonably fit for any disclosed purpose, and for any purpose for which the supplier represents that they are reasonably fit.
(2) A disclosed purpose is a particular purpose (whether or not that purpose is a purpose for which the goods are commonly supplied) for which the goods are being acquired by the consumer and that:
(a) the consumer makes known, expressly or by implication, to:
(i) the supplier; or
(ii) a person by whom any prior negotiations or arrangements in relation to the acquisition of the goods were conducted or made; or
(b) the consumer makes known to the manufacturer of the goods either directly or through the supplier or the person referred to in paragraph (a) (ii).
(3) This section does not apply if the circumstances show that the consumer did not rely on, or that it was unreasonable for the consumer to rely on, the skill or judgment of the supplier, the person referred to in subsection (2)(a)(ii) or the manufacturer, as the case may be.
Section 260 of the ACL states:
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.
[5]
Consideration
The Tribunal is not satisfied the consumer has established on the balance of probabilities that the vehicle is unsafe or unroadworthy and is consequently not fit for purpose within s 55 of the ACL. The vehicle has failed to start or has gone into "limp mode" on occasions, but not to the extent or degree to establish the vehicle is not fit for purpose. It has been driven by Mr and Ms Jones with their family since the last repairs in January 2021.
As discussed previously, there is no independent expert evidence such as a report by a mechanic or mechanical engineer that the vehicle is (or was) unsafe, or there is a risk to the safety of persons driving the vehicle by reason of it failing to start or going into 'limp mode' (or restricted performance mode). The subjective belief of Ms Jones that the vehicle is "unsafe" is not supported by independent expert evidence; nor does the history of faults and repairs to the vehicle establish that it is unsafe.
There is also no expert evidence that the vehicle is likely to continue to have mechanical problems after the last repairs were conducted in January 2021.
In respect of s 54 (2) of the ACL and s 260 (a) of the ACL, the Tribunal is not satisfied on the balance of probabilities that a reasonable consumer, assessed objectively, would not have purchased the vehicle if acquainted with the mechanical issues that has occurred with the vehicle, having regard to the matters set out in s 54 (3) (a)-(e) of the ACL.
The Tribunal accepts that the vehicle is an expensive vehicle which is marketed as having a degree of prestige and the ability to withstand off road conditions. The Tribunal has taken such matters into account in the context of s 54 (2) and (3) of the ACL. The vehicle is now 5 years old and it has travelled relatively low kilometres.
The Tribunal accepts that Ms Jones is subjectively unhappy with the purchase of the vehicle due to the number of times the vehicle has needed to be repaired and the time taken for repairs. The Tribunal also accepts that there has been inconvenience to Ms Jones and her family when the vehicle has been needed to be towed and then not available for use due to repairs, particularly where events have occurred whilst Ms Jones and her family were leaving for holidays.
Ms Jones expressed at the hearing her views that the vehicle was a "safety risk" to her family; she did not believe that the vehicle could be conscientiously sold to anyone else due to the safety risk it posed; and she was extremely stressed and upset with the reliability issues that had occurred.
However, assessed objectively, there have been two main issues with the reliability of the vehicle.
The first was the leaking battery, which then caused damage to the engine bay and the vehicle being off road for repairs for a significant period of time in November 2018, followed soon thereafter by intercooler boost hose not being attached correctly. Those faults caused the vehicle to be under repairs for most of the period to early January 2019 (a total of 59 days).
The second was the turbocharger vane failure causing the replacement of the turbocharger in January 2021 and resulting in the vehicle being under repair for a period of 32 days.
It is unfortunate that such issues occurred with the vehicle, but repairs were performed and other than for a short period, Ms Jones and her family were provided with a replacement vehicle. Although the vehicle has travelled low kilometres for its age, repair issues with the vehicle other than those two incidents have been relatively minor. The vehicle has been used, without further issue, since the repairs in January 2021.
The Tribunal is not satisfied that any inference can be drawn that the vehicle will continue to have any significant reliability problems that are not consistent with a vehicle of its price; age, kilometres travelled, and usage.
[6]
Conclusion
The Tribunal has no jurisdiction in the matter under s 79S of the FTA.
However, if the Tribunal did have jurisdiction, it is not satisfied on the balance of probabilities the vehicle is not of acceptable quality or fit for purpose under the consumer guarantee provisions of the ACL. The Tribunal is also not satisfied on the balance of probabilities the vehicle has a "major failure" within the meaning of s 260 (a) of the ACL.
Accordingly, there is no right to a refund or replacement under ss 259-263 of the ACL or any remedy available under ss 79N of the ACL if the Tribunal had jurisdiction in the matter.
[7]
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: 13 September 2021