Lance v Riviera Motors Pty Ltd [2025] QCATA 30

Fair Trading Act 1989 (Qld) s 50A, s 50C

Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 9, s 52

Alexander v Cambridge Credit Corporation Ltd (1987) NSWLR 310

Allen & Anor v Queensland Building and Construction Commission [2024] QCA 24

Burger v Orca Corporation Pty Ltd trading as KAYAKS2FISH [2022] NSWCATCD 68

Capic v Ford Motor Company of Australia Pty Ltd [2021] FCA 715

Effem Foods Ltd v Nicholls [2004] NSWCA 332

Ericson v Queensland Building Services Authority [2013] QCA 391

Ferraro v DBN Holdings Aust Pty Ltd t/as Sports Auto Group [2015] FCA 1127

Hadley v Baxendale (1854) 9 Ex 341, 354

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

Rintoul v State of Queensland & Ors [2018] QCA 20

Robinson Helicopter Company Incorporated v McDermott [2016] HCA 22

Seymour Racing Queensland Ltd [2013] QCATA 179

Vautin v By Winddown, Inc (formerly Bertram Yachts (No 4) [2018] FCA 426; (2018) 362 ALR 702

Williams v Toyota Motor Corporation Australia Limited [2022] FCA 344

Williams v Toyota Motor Corporation Australia Limited [2024] HCA 38

• [1] The applicant Tonia Lance purchased a Ford Transit Van from the respondent Riviera Motors Pty Ltd ACN 101 568 370 ('Riviera Motors') on 12 May 2021 for the sum of $13,174.80.
• [2] The motor vehicle is described as a commercial motor vehicle, however it was purchased for domestic use. It was 17 years old at the time of purchase.
• [3] In February 2022 a windscreen inspection revealed rust in the driver's side pillar of the vehicle (which had otherwise been covered by a plastic trim). Subsequent inspections revealed that the pillar was completely eaten away by rust, and the rust continued through the vehicle to the floor where a hole the size of a finger was present.
• [4] Ms Lance raised the matter with Mr La Porta, the manager of the business of Riviera Motors. She investigated the cost of repairs with a number of repairers and was informed variously that the vehicle was unrepairable and unsafe, or would cost up to $20,000.00 to repair.
• [5] By emails dated 30 May and 1 July 2022, Ms Lance rejected the motor vehicle, and asked for a full refund of the purchase price, plus money spent on the fit out of the van. Ms Lance also asserted that she would not have purchased the vehicle if she had known of the rust damage, that the vehicle is unsafe, not fit for purpose and cannot be suitably repaired.
• [6] Mr La Porta refused to refund the cost of the vehicle.
• [7] Ms Lance applied to the Queensland Civil and Administrative Tribunal for determination of a motor vehicle dispute. She relied upon her rights under s 50A of the Fair Trading Act 1989 (Qld) ('the FTA').
• [8] Mr La Porta conducted a defence of the matter on behalf of the vendor company. He asserted that the vehicle was sold with a safety certificate, that it was subject to a pre-purchase inspection which did not discover rust, and that the vehicle had been owned by Ms Lance for a 12-month time period in a coastal area and that this may have contributed to the rust.
• [9] A hearing took place on 22 June 2023.
• [10] At the hearing, evidence was given for Ms Lance by Mr Richard Brunt of Rust Rat Kustoms Pty Ltd ('Rust Rat'). Mr Brunt's evidence was unchallenged. He provided a written statement dated 4 July 2022 recording his inspection of the vehicle and the rust located in the front window, screen pillar, "A" pillar and the front floor. He expressed the opinion that the vehicle is unroadworthy as the screen pillar has rusted so far that the windscreen is all that holds the screen pillar to the "A" pillar. He also expressed the opinion that it would take years, at least three to five years to rust away to this extent, and that the rust has been hidden as there were no rust particles or debris that fell out when the plastic cover was removed. He said sika flex was used to glue the plastic trim because there is no screen pillar to clip or screw into.
• [11] Mr Brunt also gave oral evidence. He said that the driver's side pillar was rusted so that there was virtually no pillar left.[1] In response to a question from the Member as to the cause of the rust Mr Brunt said that "...its just rust over the years. I mean, it'd have to be a lot of years to do that sort of damage".[2] Mr Brunt went on to say the rust was extreme and referred to rust in the floor you could stick your finger through and a crack by the suspension.[3] He also gave evidence as to the difficulty of estimating the cost of repair because you never know where rust stops.
• [12] Colour photographs of the rust sites were in evidence.
• [13] Ms Lance's application was dismissed. A transcript of the Member's oral reasons for decision form part of the appeal proceeding.

• [14] The Member found that there is no evidence rust was present at the time of sale or prior to its identification in February 2022. He treated Mr Brunt's evidence as not stating how long rust had been present.
• [15] The Member referred to the contract terms to the effect that the customer acknowledges the dealer does not warrant the vehicle is free from defects, but also noted a reference to remedies under Australian Consumer Law.
• [16] The Member said that s 50A of the FTA provides that only s 259(2), (3) and (4) of the Australian Consumer Law (Queensland) ('ACL') is applicable to the Tribunal in relation to a motor vehicle claim. The Member then proceeded to determine whether the available orders applied on the facts of the case.
• [17] It was found that:

(a) Section 259(2) is not applicable to order recovery of costs incurred by Ms Lance because the vehicle has not been repaired and has not been rejected with grounds given to the supplier;

(b) Section 259(3) is not applicable because Ms Lance is not seeking compensation for reduction in the value of the vehicle below the price paid;

(c) Section 259(4) is not applicable because: "it was not, at the time of sale, reasonable (sic) foreseeable to the applicant, to the applicant's inspector, to the safety certificate inspector...that the applicant would suffer the - particular damage that has now - was then later in 2022 identified."

• [18] The Member concluded that there was no indication that damage resulted from a particular failure by the supplier respondent, because no one identified the rust issue before February 2022. He pointed to the age of the vehicle, 19 years at the date of the hearing, that the vehicle had been parked outside since 2021 and that it had been parked generally at a location some one or so kilometres from the ocean.
• [19] The Member said that there was no basis factually, on the evidence, for enlivening a liability against the dealer, because of the effluxion of time between the identification of the issue and the time of the sale.

• [20] Ms Lance raises the following errors on the part of the Member below:

(a) failure to apply the correct test with respect to the application of s 54 of the ACL; and

(b) failure to apply sufficient weight to the evidence relating to the rust defect affecting the vehicle.

• [21] As cast, these grounds raise questions of law.
• [22] Ms Lance also raises a failure to identify her rights pursuant to s 259(3) of the ACL to reject the goods based on a major failure, and to consider the evidence of rejection.
• [23] Ms Lance says that the Tribunal was in error in dismissing the application when a decision should have been made that Riviera Motors pay Tonia Lance the sum of $22,345.60 and that Ms Lance return the vehicle to Riviera Motors within seven days of compliance by Riviera Motors.
• [24] These latter grounds raise questions as to whether there has been a failure of the guarantee as to acceptable quality set out in s 54 of the ACL, and whether there has been a major failure of the guarantee as set out in s 260 of the ACL, which underpin the remedies potentially available to Ms Lance under s 259 of the ACL. The questions require an evaluation of the evidence and raise questions of mixed law and fact. [4]
• [25] Riviera Motors did not address Ms Lance's grounds of appeal and simply submitted that the decision below was based on evidence at the trial and that there have been no developments to warrant a reversal of the original decision.

• [26] The appeal may proceed without the need for leave under s 146 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) ('QCAT Act') insofar as questions of law only are raised. Where questions of fact or mixed law and fact are raised, leave to appeal must be granted under s 142(3) of the QCAT Act before the appeal may proceed under s 147 of the QCAT Act.
• [27] The powers of the Appeal Tribunal in deciding an appeal are different under s 146 and s 147 of the QCAT Act.
• [28] If the Appeal Tribunal finds error in the Tribunal's decision below on a question of law, it may set aside the decision. In doing so, the Appeal Tribunal may either substitute its own decision or remit the matter to the Tribunal for further consideration. The Appeal Tribunal will only be in a position to substitute its own decision if the determination of the question of law is capable of resolving the whole matter in the appellant's favour. It is normally only possible to do so when no further evidence is required to resolve outstanding issues.[5]
• [29] We do not consider any further evidence is required to determine the questions of law in this matter.
• [30] If leave to appeal is granted with respect to the questions of fact and mixed law and fact, the appeal will proceed by way of rehearing, which is a review of the evidence given at first instance and of the Member's reasons for his decision, to determine whether the Member has erred in fact or law. If the appeal tribunal concludes that the Member has erred in fact, it is required to make its own findings of fact and to formulate its own reasoning based on those findings. The appeal tribunal should not interfere with the Member's findings of fact unless they are demonstrated to be wrong by incontrovertible facts or uncontested testimony or they are glaringly improbable or contrary to compelling inferences.[6]
• [31] If leave to appeal is refused the appeal will proceed by reference only to the questions of law.
• [32] Relevant to this matter, where leave is granted the distinction between the nature of the appeal and the powers exercisable by the Appeal Tribunal lose significance.[7]

• [33] The relevant considerations in determining whether leave to appeal should be granted are:

(a) whether there is a reasonably arguable case of error in the primary decision;

(b) whether leave is needed to correct a substantial injustice cause by some error.[8]

• [34] Insofar as the Member purported to make a finding of fact with respect to the length of time rust had been present in the vehicle, the finding is at odds with the evidence including the unchallenged evidence given by Mr Brunt of Rust Rat as to how long the rust had been present and the impact of that rust on safety of the vehicle.
• [35] We conclude that the failure of the Member to evaluate the evidence and to apply the facts to the limbs of s 54 and s 260 of the ACL, so as to give a foundation for a finding as to an available remedy, demonstrates errors of mixed law and fact.
• [36] We consider that leave is required to correct a substantial injustice to Ms Lance because without the errors a different outcome would have resulted.
• [37] Leave to appeal is granted. The appeal will proceed by way of a rehearing on the evidence below.

• [38] The Member did not address the guarantee in s 54 of the ACL that goods must be of acceptable quality. The Member did not explicitly address the test for determining if there has been a failure of the guarantee. Nor did the Member address whether that failure is a major failure in terms of s 260 of the ACL.
• [39] The relevant guarantee is set out in s 54 of the ACL. Goods such as a motor vehicle are of acceptable quality if they are:

(a) fit for all the purposes for which a motor vehicle of the kind sold is commonly used; and

(b) acceptable in appearance and finish; and

(c) free from defects; and

(d) safe; and

(e) durable.

• [40] Acceptable quality involves all of the above factors, such that if one factor is absent, the goods may not be of acceptable quality.[9] The provision requires an enquiry by the Tribunal as to:

(a) what a reasonable consumer,

(b) fully acquainted with the state and condition of the motor vehicle (including any hidden defects) known at the date of the hearing, not necessarily at the point of sale,

(c) would regard as acceptable having regard to price, nature of the motor vehicle, any representations made about the motor vehicle prior to sale, and any other relevant circumstance relating to the supply of the motor vehicle.[10]

• [41] The time at which the determination of whether or not the motor vehicle is of acceptable quality is made, is when it was supplied to Ms Lance. However, that does not mean information about the vehicle not known at the time it was supplied is irrelevant. The test is: what was objectively reasonable for Ms Lance to accept, taking into account all relevant information available at the time of the hearing.[11] Riviera Motors bears the onus of establishing that any failure arose after the vehicle was supplied.[12]
• [42] Insofar as the Member addressed whether there had been a failure of the guarantee of acceptable quality, the Member attempted to determine the cause of the problem at the time of supply and formed a view as to whether either Ms Lance or Riviera Motors was aware of the rust defect at that time.
• [43] The Member suggested that there is no evidence that rust was present at the time of sale or prior to its identification in February 2022. The Member seemed to suggest that the rust in the vehicle could have occurred during the period of less than 12 months that Ms Lance owned the vehicle before discovering the hidden rust. We consider that conclusion to be erroneous in the face of the photographs, the oral and written evidence of Mr Brunt of Rust Rat, and of Evenflow Bodyworks in its report dated 21 June 2022, which were before the Member.
• [44] Evenflow Bodyworks say that the rust has not happened in the last 12 months and that the pillar rust would have taken years. That view is supported by Mr Brunt.
• [45] We accept the unchallenged evidence of Mr Brunt and find that:

(a) the vehicle suffered extensive rust in the front window and screen pillar, that the "A" pillar was so rusted that there was virtually no pillar left, that the floor was rusted so that a finger could be poked through it and that there was a crack by the suspension.

(b) the "A" pillar rust was hidden by a plastic trim sika flexed into place;

(c) the vehicle was unroadworthy as a result of the extent of rust;

(d) the rust took many years to develop;

(e) the cost of repair is difficult because once work starts it is difficult to know where rust might end.

• [46] We find that the vehicle is unroadworthy, and because there is no structural support for the windscreen on the driver's side, we find that it is unsafe. As a result, the vehicle does not meet the characteristics of a vehicle of acceptable quality. The evidence supports a conclusion that the vehicle was not of acceptable quality at the time of sale. We do not think a reasonable person would consider the vehicle to be of acceptable quality given the not insubstantial purchase price of $13,713.00, even though the vehicle was 17 years old at the time of purchase. One might expect some rust in a vehicle of that age but not one which was structurally unsafe, particularly as a result of a rusted out "A" pillar held together by a piece of plastic trim.
• [47] The grounds of appeal raised by Ms Lance succeed in that the Member failed to apply the correct test with respect to the application of s 54 of the ACL and failed to apply sufficient weight to the evidence concerning how long the rust defect had been present in the vehicle.
• [48] Applying the relevant test, we find that the vehicle was not of acceptable quality in contravention of s 54 of the ACL.
• [49] The Member was in error in failing to make that finding.
• [50] By s 260 of the ACL goods such as a motor vehicle suffer a major failure of the guarantee of acceptable quality if, relevantly, a reasonable consumer would never have bought it if they knew about the nature and extent of the failure; or the motor vehicle is not of acceptable quality because it is unsafe.
• [51] We have previously found that a reasonable consumer would not have bought the vehicle if they knew about the nature and extent of the failure of the guarantee of acceptable quality. We have also found that the vehicle is unsafe. On both these bases we find that the failure of the guarantee as to acceptable quality is a major failure.
• [52] The Member was in error in the finding he made as to presence and extent of rust at the time of supply and was in error in failing to make a finding that there had been a major failure of the guarantee.
• [53] A major failure of the guarantee as to acceptable quality entitled Ms Lance to reject the vehicle under s 262 of the ACL. On the evidence Ms Lance did so by her written communications dated 30 May and 1 July 2022. We find that as required by s 262(2) of the ACL Ms Lance rejected the vehicle within the period from the time of the supply within which it would be reasonable to expect the failure to became apparent.
• [54] The Member was in error in finding that Ms Lance had not rejected the motor vehicle.
• [55] By s 263 of the ACL, if a consumer rejects goods, they must return the goods to the supplier unless, relevantly, the goods cannot be returned, removed or transported without significant cost to the consumer because of the nature of the failure to comply with the guarantee to which the rejection relates. The vehicle has not been returned. At the hearing of the appeal proceeding Ms Lance said that the vehicle has remained parked in front of her home awaiting a conclusion to this matter. We note that Mr La Porta on behalf of the respondent refused to accede to Ms Lance's request for a refund following her rejection of the vehicle or to acknowledge any obligations under the ACL. Given that circumstance and given the unsafe nature of the vehicle we consider the vehicle could not be returned without significant cost to Ms Lance.[13]
• [56] For completeness we also find that there is no reason why Ms Lance was not entitled to reject the vehicle.
• [57] Once the finding has been made of a major failure of the guarantee as to acceptable quality and that the vehicle had been lawfully rejected it is then appropriate to consider any remedy available to Ms Lance under s 259 of the ACL.

• [58] Ms Lance claims against Riviera Motors under s 259(3) of the ACL for a refund of the purchase price and associated costs of $13,174.80 together with interest in the sum of $1,517.80. The claim for a refund arises from the interplay of ss 260, 262 and 263 with s 259(3)(a) of the ACL.
• [59] Under s 263 of the ACL Ms Lance may elect to be paid a refund of the money paid for the vehicle.
• [60] We consider that all relevant provisions of the ACL have been met and that Ms Lance should be paid the sum of $13,174.80 by way of refund of the purchase price of the vehicle. As this matter did not proceed as a minor civil dispute no interest may be awarded under s 14 of the QCAT Act as claimed.

• [61] Ms Lance claims as damages under s 259(4) of the ACL the wasted fit out costs by Dragonfire Campers in the sum of $6,320.00; and service fees from Darrin Costello in the sum of $60.00
• [62] The question raised by s 259(4) is whether it was reasonably foreseeable that Ms Lance would suffer loss or damage in fitting out the vehicle for camping, and having the vehicle serviced as a result of a failure to comply with the guarantee.
• [63] This section provides for recovery of consequential loss, which:

(a) is assessed by reference to facts that are proved to exist at any time from the failure to comply with the guarantee, until the time of judgment;

(b) includes, relevant to this case, an adverse effect on a person's financial position;

(c) can be recovered if the loss or damage is:

(i) caused by the failure to comply with the guarantee; and

(ii) the loss or damage was reasonably foreseeable, that is the loss or damage was not too remote. (Put another way, a reasonable person would have realised that such loss or damage would probably result from the failure of the guarantee, noting that it is not necessary for that person to contemplate the degree or extent of the loss suffered, nor the precise events giving rise to it, but only the kind or type of loss in question),[14] and

(d) it is not essential that the consumer retains title to the goods.[15]

• [64] The cost of fit out of the van is wasted expenditure given that there has been a major failure of the guarantee as to acceptable quality and given that the vehicle has been rejected with a consequent passing of titleto the vehicle to Riviera Motors.[16] We find that the loss was caused by the failure of the guarantee. As to whether the loss was reasonably foreseeable is another matter.
• [65] In Vautin's case the consumer recovered the cost of upgrades and the fitting of a marlin tower to a yacht, on the basis that cost of acquisition and fitting were wasted because of the failure of relevant guarantees.[17] In awarding damages for wasted expenditure Derrington J noted that no contrary view was put by the respondent.
• [66] In Capic v Ford Motor Company of Australia Pty Ltd[18] the consumer was able to recover extra tax and finance paid with respect to a more valuable car than that supplied.
• [67] On the basis that any money spent on a vehicle which is unsafe and cannot be driven is wasted we find that the cost of fitting out the van as a camper van and having it serviced was wasted and was the probable consequence of failure of the guarantee.
• [68] We consider that a van fulfills many needs in terms of use of its internal space and that it should have been in the contemplation of a reasonable person that expenditure on fit out of the van would be wasted if there was a major failure of the guarantee. That is, the loss or damage was reasonably foreseeable. Riviera Motors has made no submissions in relation to this aspect of Ms Lance's claim which was squarely before it in the proceedings below.
• [69] We award the sum of $6,380.00 as damages for the two items of claimed loss under s 259(4) of the ACL.

• [70] Finally, Ms Lance seeks to recover her filing fees in the proceeding below, and costs of the appeal.
• [71] Section 50C of the Fair Trading Act 1989 (Qld) provides that the Tribunal may make a costs order against the respondent in the amount of the prescribed filing fee paid by the applicant. This power is subject to s 102(1) of the QCAT Act which provides that the Tribunal may make a costs order if the interests of justice require it. Ms Lance has been successful in the proceedings. It is in the interests of justice to order Riviera Motors to pay the filing fee of $367.00 in the proceeding below and the filing fee of $759.10 in this proceeding.
• [72] The Tribunal has no power under s 50C to award the cost of obtaining a transcript in the appeal proceeding.

• [73] The Appeal Tribunal orders that:
  1. Riviera Motors Pty Ltd ACN 101 568 370 pay to Tonia Lance the sum of $20,680.09 within twenty-eight (28) days of the date of this decision.
  2. Riviera Motors Pty Ltd ACN 101 568 370 at its own cost take possession of the Ford Transit Van from Tonia Lance within twenty-eight (28) days of the date of this decision.

[4] Allen & Anor v Queensland Building and Construction Commission [2024] QCA 24 [59].

[5] Ericson v Queensland Building Services Authority [2013] QCA 391 [25].

[6] Robinson Helicopter Company Incorporated v McDermott [2016] HCA 22 [43].

[7] Seymour Racing Queensland Ltd [2013] QCATA 179 [18].

[8] Rintoul v State of Queensland & Ors [2018] QCA 20 [10].

[9] Williams v Toyota Motor Corporation Australia Limited [2022] FCA 344, [164]; Vautin v By Winddown, Inc (formerly Bertram Yachts (No 4) [2018] FCA 426; (2018) 362 ALR 702 ('Vautin') [142].

[10] Medtel Pty Ltd v Courtney [2003] FCAFC 151; (2003) 130 FCR 182 ('Medtel') [64], [65]-[70], [72]; Capic v Ford Motor Company of Australia Pty Ltd [2021] FCA 715 ('Capic').

[12] Effem Foods Ltd v Nicholls [2004] NSWCA 332.

[13] Vautin (n 9); Ferraro v DBN Holdings Aust Pty Ltd t/as Sports Auto Group [2015] FCA 1127 [22]; Burger v Orca Corporation Pty Ltd trading as KAYAKS2FISH [2022] NSWCATCD 68 [84].

[14] Hadley v Baxendale (1854) 9 Ex 341 [354]; Alexander v Cambridge Credit Corporation Ltd (1987) NSWLR 310 [365]-[366].

[15] Williams v Toyota Motor Corporation Australia Limited [2024] HCA 38 [95], [104], [109].

[16] Competition and Consumer Act 2010 (Cth) sch 2 s 263(6).