Lewington v Manning Valley Motor Holdings Pty Ltd

EVIDENCE

1. The applicant filed documentary evidence in support of her claim. These documents were entered into evidence and marked as "exhibit 1". In addition, both Mrs and Dr Lewington gave affirmed oral evidence. The applicant relied upon an expert report of Tim Blake, engineer (undated) ("Blake report").
2. The respondent filed documentary evidence in compliance with the previous directions made by the Tribunal. These documents were entered into evidence and marked as "exhibit 2". In addition, Mr Tomkin and Mr Felton gave affirmed oral evidence on behalf of the respondent. The respondent did not rely on any independent expert evidence.
3. The parties were given the opportunity to cross examine each other.
4. The Tribunal heard the evidence and reserved it's decision. The parties were invited to provide the Tribunal with written submissions. Both parties provided written submissions after the conclusion of the hearing.
5. The Tribunal has read and considered the documentary and oral evidence of the parties, including the parties written submissions.

JURISDICTION

1. The Tribunal has jurisdiction to hear and determine this matter under Part 6A of the Fair Trading Act 1987 (NSW)("FT Act") FT Act (sections 79I and 79J) as an order is sought that requires the respondent to pay a specified sum of money subsection 79E(1)(a).
2. The applicant is a consumer pursuant to section 79D. The respondent is a supplier of goods on the basis that it supplied the goods (being the vehicle) the subject of the dispute in the course of carrying on a business: sections 79D and 79G.
3. The vehicle was supplied in NSW: section 79K(1)(a). The application has been made to the Tribunal within the three-year time limit required by section 79L. The claim falls within the monetary limit on the Tribunal's jurisdiction: subsection 79S.

THE FACTS

1. The evidence reveals the following facts: 1. The respondent is a licenced motor dealer. 2. The applicant purchased a 2023 Ssangyong Rexton Ultimate 2.2T Diesel Auto 4WD vehicle NSW registration number EYA92J ("the vehicle") from the respondent on about 25 February 2023. 3. The applicant paid a total of $61130 for the vehicle. 4. Upon taking delivery of the vehicle the applicant noticed that there was a discrepancy in one of the specifications of the vehicle. Namely, that the Gross Combined Mass ("GCM") on the vehicle's affixed metal identification plate from the manufacturer stated 5960kg which was less than the advertised value of 6460kg. 5. The applicant immediately rejected the vehicle and requested a refund of the purchase price. 6. The vehicle was left at the dealership and the applicant met with the dealer principal Mr Tomlin on or about 3 March 2023. 7. The parties fell into dispute about the issue of the GCM of the vehicle. 8. Mr Tomlin said that he was not responsible for the vehicle identification plate and directed the applicant to Ssangyong Australia should she wish to further pursue a refund. 9. The applicant contacted Ssangyong Australia who stated that they were unable to provide a refund as they had not supplied the vehicle to the applicant. 10. The applicant says that the decision to purchase the vehicle was based pm it having a higher GCM than comparable vehicles and that this was communicated to the salesperson prior to purchase and in subsequent discussions with Mr Tomlin. 11. The applicant made a complaint to NSW Fair Trading in or about March 2023. The intervention of NSW Fair Trading was unable to resolve the issues in dispute between the parties. 12. The applicant filed this application before the Tribunal on 2 May 2023.

The Law

1. The Australian Consumer Law NSW ("ACL") is part of the law of NSW, and may be used in deciding a consumer claim under Part 6A of the FT Act by virtue of section 28 of the FT Act. It contains, in Chapter 3, a number of guarantees by suppliers of goods and services that are implied into consumer transactions. These include in relation to the supply of goods, a guarantee that goods meet the description provided and are fit for purpose.
2. The Tribunal's jurisdiction under the ACL is not entirely equivalent to its jurisdiction under Part 6A of the FT Act. However, there is no real difference in the jurisdiction for the purposes of these proceedings.
3. The relevant sections of the ACL in this matter include section 55 of the ACL which sets out the guarantees as to fitness for purpose and relevantly provides as follows: 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).
4. Section 56 of the ACL says: 56 Guarantee relating to the supply of goods by description (1) If: (a) a person supplies, in trade or commerce, goods by description to a consumer; and (b) the supply does not occur by way of sale by auction; there is a guarantee that the goods correspond with the description. (2) A supply of goods is not prevented from being a supply by description only because, having been exposed for sale or hire, they are selected by the consumer. (3) If goods are supplied by description as well as by reference to a sample or demonstration model, the guarantees in this section and in section 57 both apply.
5. In section 259 of the ACL the remedies that are available to a consumer where a supplier of goods has failed to comply with the guarantee as to supply of goods by description and fitness for purpose are set out.
6. If the failure to comply is a "major failure", the consumer may, subject to section 262 of the ACL, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection: subsection 259(3)(a). The consumer may also, 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 failure: subsection 259(4).
7. Section 261 of the ACL sets out how suppliers may remedy a failure to comply with a consumer guarantee. If, under section 259(2)(a), a consumer requires a supplier of goods to remedy a failure to comply with a guarantee referred to in section 259(1)(b), the supplier may comply with the requirement, by repairing the goods, or by replacing the goods with goods of an identical type, or by refunding any money paid by the consumer for the goods and an amount that is equal to the value of any other consideration provided by the consumer for the goods.
8. However, section 262 of the ACL limits the circumstances in which a consumer is entitled to reject goods. A consumer is not entitled to notify a supplier of goods that the consumer rejects goods if, relevantly, the goods were damaged after being delivered to the consumer for reasons not related to their state or condition at the time of supply: section 262(1)(c).

Consideration

1. In order to determine this matter, and having regard to the application, the facts and the law, the Tribunal must answer the following: 1. Did the respondent fail to comply with the guarantee as to supply of goods by description and or fitness for purpose in the supply of the vehicle to the applicant? 2. If so, was this a major failure? 3. If so, was the applicant entitled to reject the vehicle? 4. What remedy is the applicant entitled to? 5. What orders are necessary to do justice between the parties?

supply of goods by description

1. As noted above s 56 of the ACL contains a guarantee as to the supply of goods by description.
2. The ACL defines goods to mean, among other things, 'ships, aircraft and other vehicles'. The sale of the Ssangyoung Rexton Ultimate 2.2T Diesel Auto 4WD by the respondent to the aplicant for the sum of $61,130 was in trade and commerce since the respondent was clearly in the business of the sale of motor vehicles, being a licensed motor vehicle dealer.
3. The Tribunal is satisfied the respondent supplied the vehicle to the applicant with a description as contained on their website that the vehicle had a GCM of 6440 kg (as per page 4 of the applicant's documents). However, when the applicant took delivery of the vehicle it was clear from the vehicle identification plate that the GCM was in fact 5960kg (approximately half a tonne less than that which was advertised.
4. In the matter of Vince Taskovski & Anor v Otomobile Shoppe Pty Ltd [2015] NSWCATCD 24 the facts included a supplier of an Audi Q7 Quattro Wagon vehicle replacing the engine of the vehicle with a Volkswagen engine without advising the consumer that the Audi engine had been replaced with a Volkswagen. At [26] the Tribunal Member stated: The engine substitution raises ACL s56 (Guarantee relating to the supply of goods by description). The sale of an Audi vehicle is a sale by description, namely that the Vehicle is an Audi. The replacement of the Audi engine with a Volkswagen engine detracts from the description of the vehicle as an Audi as it is no longer an Audi but has become in fact a hybrid or perhaps modified vehicle better described as an Audi with a VW engine. On this analysis the Vehicle does not correspond with the description of an Audi Vehicle; and the respondent has breached this statutory guarantee for the purposes of ACL s56.
5. This approach to the interpretation of s 56 of the ACL was confirmed by the appeal panel in the matter of Smith v Origin Concepts Pty Ltd [2017] NSWCATAP 153 at [48].
6. Similarly in the present matter the Tribunal finds that the respondent breached the guarantee contained in s 56 of the ACL by supplying the vehicle to the applicant when it did not correspond with the description provided because it had a different GCM on it's vehicle identification plate to that which it was advertised with.
7. Having made a finding of a breach of s 56 of the ACL it is not necessary to also address s 55 of the ACL.

major failure?

1. The Tribunal is satisfied on the evidence that the failure to comply with the consumer guarantee contained in s 56 of the ACL is a major failure.
2. This is because the failure is not capable of being quickly or easily remedied by the respondent so that the goods meet the consumer guarantee contained in s 56. The difference between the stated GCM and the GCM as set out on the vehicle identification plate is approximately 500kg or half a tonne.

REJECTION OF THE VEHICLE

1. In the matter of Barbour v Autosports Five Dock Pty Ltd [2020] NSWCATAP 141 the appeal panel set out at [83] the test for determining whether the rejection period has ended: "From these cases it can be seen the following matters are relevant considerations in determining the rejection period for a major failure and when it has ended: The rejection period commences at the time of supply; The rejection period ends when it would be reasonable for the defect to become reasonably apparent; The period of time must be reasonable having regard to the defect or defects. The test is objective but the actual experience of the consumer is relevant; In determining the time in which a failure to comply becomes reasonably apparent regard must be had to the factors in s 262(2)(a)-(d) of the ACL; Matters affecting the length of the period and when a major failure may become reasonably apparent include: Whether the good are old or new. In the case of new goods it will usually be longer period; Whether the goods are regularly inspected, whether an inspection process is customary and, if so, whether such inspections would be expected to reveal the failure; Whether a reasonable consumer fully acquainted with the state and condition of the goods, would know the cause of the defect, what needed to be done to fix it and the cost of doing so; Whether the supplier or repairer had identified a fault and carried out a repair which the consumer understood would rectify the fault; Whether any subsequent testing or period of use was necessary and/or elapsed following any repair to see if it was successful; Whether a failure, or a series of failures in combination with each other, might render the goods unfit or otherwise lead a reasonable consumer to conclude they would not have acquired the goods; Whether a reasonable time has elapsed following the consumer becoming fully acquainted with the failure to make a decision about whether to reject the goods".
2. Applying the above principles in the current matter, the rejection period had not ended, upon learning of the discrepancy between the advertised GCM and the GCM as stated on the vehicle identification plate the applicant immediately rejected the vehicle and sought a refund. Further, the applicant left the vehicle with the respondent for a number of days.
3. The respondent refused to provide a refund to the applicant and referred her to the manufacturer. The manufacturer is not able to provide a refund under the provisions of the ACL.
4. The fact that the respondent did not accept the return of the vehicle does not disentitle the applicant to the remedy that she is now seeking.

appropriate remedy

1. The ACL provides for a refund of the amount paid by a consumer where there has been a 'major failure'. The guarantee found to have been breached falls within section 259(1) of the ACL thereby enlivening section 260 of the ACL to make the failure to comply with the guarantee in section 56 a 'major failure'. On or about 25 February 2023 the applicant put the respondent on notice that there had been a 'major failure' and that she was seeking a refund of the purchase price of the vehicle on the basis of the vehicle not corresponding with it's description in terms of it's GCM capacity. Further, the applicant left the vehicle with the respondent for a number of days.
2. Pursuant to section 263(4) of the ACL the respondent was obliged to refund the purchase price to the appellant.
3. This did not occur and the applicant was referred to the manufacturer. The manufacturer cannot provide a refund to the applicant under the terms of the ACL.
4. The applicant initially sought a return and a refund of the vehicle but when this did not happen the applicant sought to take steps to mitigate her losses by way of a private sale of the vehicle. The applicant then sought to recover the amount representing the difference in the sales price paid by her and the price that she sold the vehicle for being an amount of $8130.
5. Section 259(4) of the ACL states that: (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.
6. The test in relation to reasonable foreseeability was set out in the matter of Hadley v Baxendale [1854] EngR 296; (1854) 9 Exch 341. That is in order for the Tribunal to award compensation for damage and loss based on breach of the ACL, the applicant must prove that the loss claimed results from the usual course of events, or arises naturally from, such a breach, or that it was in the reasonable contemplation of the parties at the time the contract was made that such a loss would be incurred if the ACL was breached in the manner alleged (in other words, the loss must have been foreseeable).
7. The Tribunal is satisfied on the evidence that the loss claimed by the applicant is a reasonably foreseeable consequence of the breach of s 56 of the ACL by the respondent. Further, the applicant has taken steps to mitigate her losses.
8. Therefore, the Tribunal considers that it is able to award the applicant the amount of $8130 by way of damages suffered as a result of the failure by the respondent to comply with s 56 of the ACL. This loss being the difference in the amount paid by the applicant for the vehicle and the price that she sold the vehicle for.
9. The Tribunal is satisfied that these orders are fair and equitable to all parties to the claim pursuant to s 79U(1) of the FTA.

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: 22 December 2023