Matumaini v Automobile Industries Pty Ltd [2017] NSWCATAP 93 | Case summary

Matumaini v Automobile Industries Pty Ltd [2017] NSWCATAP 93 | Case summary | Zoe

[5]

Purchase of vehicle

In 2013, the Respondent was carrying on business of a used car dealer under the name of Sydneywide Wholesale Cars. On 23 October 2013 it sold a Kia Carnival wagon to the Appellant. The notice of sale and the tax invoice showed that the price was $7,640. The tax invoice showed that $1,000 had been received but it also showed that the customer was to pay $900 balance within 2 weeks.
For the purpose of the Tribunal proceedings the Appellant swore an affidavit dated 14 May 2015.
A few days before 23 October 2013, the Appellant attended at the Respondent's premises looking for a family vehicle as his wife and children were moving to Australia from Rwanda and he needed something large enough for all of them to travel in. A person named Arnold showed the Appellant the wagon. The Appellant did not want to purchase at that time as he wanted to discuss it with his wife. He left $100 as a deposit. It appears that Arnold gave the Appellant a receipt. There is some inconsistency between the receipt and the notice of sale and tax invoice. The receipt shows an amount of $6,990 with a deposit of $100 leaving a balance of $6,890. Written next to the $6,990 are the words "Kia Carnival blue". There is also written on the receipt: 3 month rego NC 12 months warranty N/C.
A few days later the Appellant attended the Respondent's premises a second time. He had had a discussion with his wife and they had decided to purchase the vehicle. The Appellant again spoke to Arnold and told him that he needed finance and Arnold referred him to Carloan City. It appears that the Appellant contacted Carloan City and ultimately he was given a loan of $9,763 by Australia and New Zealand Banking Group Limited. As part of his evidence before the Tribunal, the Appellant produced a letter from Australia and New Zealand Banking Group Limited to himself dated 23 October 2013. The letter referred to an ANZ car loan and that the amount of the contract was $9,763 with terms charges of $1,976.24.
In his affidavit, the Appellant stated that on or around 23 October 2013 he returned to the Respondent's premises for a third time to collect the vehicle. On this occasion he saw a man named Sam who told him that he had to pay a $1,000 commission and buy a warranty for the vehicle as it did not come with a statutory warranty. The Appellant was told that the commission was for "us" finding the vehicle for the Appellant and that the Appellant needed a warranty because it was part of a package with the car. The Appellant was very unhappy about these two requirements but understood that that was part of how the sale was done and that he did not have a choice. In his affidavit he stated that he agreed to pay the commission of $1,000 and to purchase the warranty for $1,995. The warranty document shows that it was financed by Esanda and that the price of the warranty was $1,995.
On the same day after the conversation with Sam, the Appellant went to collect the vehicle. Arnold handed him the keys and the Appellant asked was everything okay with the car. Arnold responded: "Yes, we have done the service for you, we have checked the engine, changed the water and the oil."
In his affidavit, the Appellant stated that his loan was approved by Esanda/ANZ in the amount of $9,763 on 23 October 2013. He also stated that on 5 November he returned to the Respondent's premises and paid $300 towards the commission. He stated that the remaining $600 was paid on 15 February 2014 to finalise the commission. The Appellant produced to the Tribunal two receipts, one of which showed an opening balance of $900 with cash of $300 paid on 5 November 2013 and a closing balance of $600 on that date. The other receipt recorded that a final payment of $600 had been paid fully on 15 February 2014 and that it was in respect of a Kia Carnival Blue 7 seater.
According to both the tax invoice and notice of sale, the vehiclewas built on 2 March 2004; it had travelled 165,982 kilometres and the registration expired on 22 January 2014. It appears that the $1,995 for the warranty was borrowed by the Appellant and that it was included in the Esanda/ANZ loan of $9,763.

[6]

First breakdown

On 17 December 2013 the Appellant was driving the vehicle from his office at Blacktown to his home at Penrith when the vehicle slowed down and stopped. The temperature gauge was not high and the vehicle was not overheating. He tried to start the vehicle and it went a few metres and stopped again. He then made a call and had the vehicle towed away: see the Appellant's evidence at T14 - 15 and par 16 of the Appellant's affidavit.
The Appellant rang the Respondent and he believes he spoke with Sam. He told him that the vehicle had broken down and he could not drive it. Sam told him that he could try to go to a repairer who was a friend of his and who would be able to help the Appellant fix it. He said that the friend might be cheaper than anyone else. The Appellant was not offered a refund or told there was anything else that he could do in this situation except get the vehicle repaired. Sam gave the Appellant the telephone number of a repairer who the Appellant called. The repairer was unable to provide the Appellant with assistance under his warranty.
The Appellant then called Australian Warranty Network (AWN) with whom he had entered into a Guardian Warranty Policy with a commencement dated 21 October 2013. He was told that he would need to take the vehicle to a repairer who was covered by the AWN warranty. The Appellant then organised for the vehicle to be towed to a repairer, Penrith Car Service: see [16] - [21] of the Appellant's affidavit.)
On 8 January 2014 Penrith Car Service sent an email to AWN. Part of the email was in the following terms: Vehicle towed to our workshop. Inspected engine for mechanical damage and carried out compression test. Found at least 2 cylinders with a zero compression. Upon further inspection with a camera inside the combustion chamber/cylinder bore we found evidence of a cracked piston and scouring of the cylinder bore and could also see significant wear/damage to the valves.
The email went on to recommend removal and replacement with a second hand tested engine as a cheaper alternative. A quotation was then given in the email showing the price of a second hand engine at $2,400 with a total cost for the second hand engine, labour and other incidentals amounting to $4,537.13.
Penrith Car Service carried out the above work and produced a tax invoice dated 21 January 2014 addressed to AWN in respect of the work totalling $2,000.
There does not appear to be any dispute between the parties that the maximum cover provided by AWN for the above work was $2,000. It therefore appears that the Appellant was required to pay $2,537.13 to Penrith Car Service to carry out this work.

[7]

Second breakdown

In [24] of his affidavit, the Appellant states that on or around the beginning of April 2014 the vehicle broke down again. This occurred approximately 12 weeks after it was first repaired. He called AWN and was told that he needed to take the vehicle back to Penrith Car Service to diagnose the current issue. At Penrith Car Service the Appellant was told that he would need to replace the engine again (see pars 24 and 25 of the Appellant's affidavit).
Penrith Car Service prepared a repair order dated 15 April 2014.
The repair order gave a price of $5,460 inclusive of GST. It also included the following: Vehicle brought to workshop as overheating, running rough and misfiring. Carried out compression test: …. Pressure tested cooling system: Found coolant leaking into 1 & 3. Result: Unbalanced compression ratio. Possible cracked head or blown head gasket between cylinder 1 & 3 and water jackets. Recommend motor be replaced …
On 30 April 2015 AWN emailed the solicitor for the Appellant confirming details concerning the January 2014 engine claim and the April 2014 claim. The January 2014 claim was assessed as being within the terms and conditions of the warranty contract and the warranty provided for a maximum claim amount of $2,000. That amount was approved and paid direct to Penrith Car Service. The odometer reading at the time of the engine replacement was 171,115 kilometres.
The email stated that in respect of the April 2014 claim, the Appellant was directed back to Penrith Car Service for diagnosis of the issue. Penrith Car Service confirmed that the head gasket had blown between cylinders 1 and 3 and due to the engine suffering from being overheated, it was suggested that the engine be replaced. The email stated that as current problem was diagnosed to be in the cylinder head, the warranty provided cover for the cylinder head up to the amount of $550. That claim amount was approved but the customer advised the repairer not to proceed with the replacement of the engine.
During his evidence in the Tribunal the Appellant was asked about the location of the vehicle. He stated that he had it towed to his office and that's where it was (T13). In pars 27 and 28 of his affidavit, the Appellant stated that the repairs were going to cost $5,460 and that he could not afford to pay this sum. He decided not to go ahead with the repairs and that since that time he has been unable to drive the vehicle.

[13]

Ground 1

So far as the ground of legal unreasonableness is concerned, the Appellant submitted that the Tribunal would err if its decision was unreasonable in the sense discussed in Minister for Immigration and Citizenship v Li (2013) 249 CLR 332. Attention was drawn to what was said by the plurality at [75] - [76].
The Appellant made the following submissions on this ground. At no time during the hearing did the Tribunal or the Respondent put in issue the Appellant's sworn evidence that he had checked the water on the vehicle and may have checked the oil. There was no evidence that if the Appellant had not checked the oil in the eight weeks since he had purchased the vehicle hen that could have been a cause of the car's failure. There was no challenge to the Appellant's sworn evidence that all that had been discussed when he bought the vehicle was the need to register it in three months. There was no evidence that any conduct by the Appellant, such as abnormal use or the like, could have caused the car's failure. This was a vehicle which cost over $9,000: it was not a cheap used car. None of these matters and the inferences from them were discussed and considered by the Tribunal. All the Tribunal had regard to was that Mr Roberts had only identified a possible cause of the car's problems. The only rational inference was that the problem was somehow inherent in the vehicle at the time it was sold. There was no rational or intelligible justification given by the Tribunal in ignoring these matters and not considering the evidence as a whole. Once regard was had to all the circumstances, and the conduct of the consumer was eliminated as a possible cause, the rational inference was that the vehicle was not fit for all the purposes for which goods of that kind are commonly supplied and thus was not of acceptable quality within the meaning of s54 (1) of the Australian Consumer Law 2010 (ACL). Accordingly, the Tribunal's conclusion to the contrary, and focus on only one aspect of the evidence, was unreasonable in the sense discussed in Li.

[18]

Respondent's submissions

The Respondent's submissions are summarised below.
The Appellant could only establish a possible cause, not a likely cause nor an actual cause which directly goes to the question of whether the condition of the vehicle was of acceptable standard and fit for its purpose at the time of sale. The Respondent did not breach the consumer guarantees. So far as the second ground of appeal was concerned, one of the Tribunal's considerations was whether the Appellant could determine the probable cause of the first breakdown. That was not the only factor to be considered but establishing a probable cause of the first breakdown was a central element in answering the question of whether the vehicle was of acceptable quality at the time of sale. The Tribunal assessed the ACL and applied the correct legal test in its findings.
So far as the fourth ground of appeal was concerned, although the Tribunal's decision did not specifically make reference to whether the vehicle was fit for its purpose, this component formed part of the criteria in determining whether the vehicle was of acceptable quality at the time of sale. On this basis, the Tribunal did not fail to take into account all of the relevant considerations as it was required to assess whether the vehicle was fit for its purpose when determining whether the vehicle was of acceptable quality.
On the question whether the vehicle was free from defects, safe and 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 s 54 (3) of the ACL, were concerned, the vehicle was serviced on or about 25 September 2013, by Great Western Mobile Mechanical Repairs. The Respondent was required to provide a Pink Slip also referred to as a "pre-vehicle inspection report" and such a report could only be obtained after an authorised mechanic inspected the vehicle and verified that it was roadworthy and therefore "safe" to drive. Had this inspection not been satisfactory, a white slip would have issued which meant that repairs were required before the vehicle could be safe to drive. The vehicle was inspected on two separate occasions by two different mechanics and the vehicle was safe, durable and free from defects at the time of sale.
Attached to the Respondent's written submissions was a tax invoice dated 25 September 2013 from Great Western Mobile Mechanical Repairs. It was for $100 and it gave the following description: Kia Carnival Changed OIL O/F check over car.
It is not clear whether this tax invoice was tendered before the Tribunal but the Appeal Panel will proceed on the basis that it was an exhibit.
The Appellant inspected and test drove the vehicle prior to its purchase and he was satisfied with both the inspection and the test drive as he did not raise any concerns about the car's appearance, its finish and/or the manner in which it drove. Had there been issues with the test drive (vehicle was slow and sluggish, vehicle was overheating etc) then it would have revealed that the vehicle was not of acceptable quality at the time of sale.
So far as the fitness of the vehicle for the purposes of s 54 (2) (a) and s 55 of the ACL was concerned, taking into account that the vehicle was just under ten years old, the price of $7,640 and the odometer reading was 166,040, the vehicle was fit for its purpose and durable at the time of sale.
The use of the vehicle by the Appellant caused the problems with the vehicle and affected its durability. The failure of the Appellant to service the vehicle when due (three months or 5,000 kilometres whichever occurs first) was failure of the Appellant to take reasonable steps to avoid the quality becoming unacceptable. Nor did the Appellant take steps to regularly check the oil levels. (The Appeal Panel notes that the submission concerning three months or 5,000 kilometres, was apparently based upon an incorrect reading of the AWN warranty policy).
The Appellant was required to service the vehicle when it reached 5,000 kilometres and this was one of the requirements under the warranty purchased by the Appellant. The Appellant had no intention of servicing the vehicle at the time required under the warranty policy and the Appellant only had the intention of servicing the vehicle when it was due for registration. The Appeal Panel notes that this submission is also based upon an incorrect reading of the AWN warranty policy. The relevant clause in the policy provided for the Appellant to agree: To maintain a regular service schedule in accordance with manufacturer's specifications with a qualified motor mechanic at intervals not to exceed 10,000 (ten thousand) kilometres or 6 (six) months, whichever occurs first, an allowance of no more than 2,000 (two thousand) kilometres or 30 (thirty) days beyond the stated intervals will be accepted. In addition any Motor Vehicle over the age of 10 (ten) years or excess of 200,000 (two hundred thousand) kilometres must also have a motor mechanics safety check and oil change at intervals not exceeding 3 (three) months or 5,000 (five thousand) kilometres whichever occurs first, an allowance of no more than 1,000 (one thousand) kilometres or 30 (thirty) days beyond the stated intervals will be accepted.
As the Appellant had admitted that there were no signs that the vehicle was overheating before the major failure, it was not possible for the vehicle to travel over 5,000 kilometres had these defects been present at the time of sale.
The first breakdown was caused not only by lack of maintenance by the Appellant but also by the abnormal use of the vehicle by the Appellant.
In relation to the second major failure, in circumstances where there were problems with the vehicle after having the engine replaced meant that the only rational inference was that the Appellant was using the vehicle abnormally and failed to properly maintain the car. He caused the condition of the vehicle to deteriorate and caused the vehicle to be of unacceptable quality after the time of sale.

[19]

Australian Consumer Law (NSW)

Section 54 of the Australian Consumer Law (NSW) (the ACL NSW) is in the following terms: 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. (4) If: (a) goods supplied to a consumer are not of acceptable quality; and (b) the only reason or reasons why they are not of acceptable quality were specifically drawn to the consumer's attention before the consumer agreed to the supply; the goods are taken to be of acceptable quality. (5) If: (a) goods are displayed for sale or hire; and (b) the goods would not be of acceptable quality if they were supplied to a consumer; the reason or reasons why they are not of acceptable quality are taken, for the purposes of subsection (4), to have been specifically drawn to a consumer's attention if those reasons were disclosed on a written notice that was displayed with the goods and that was transparent. (6) Goods do not fail to be of acceptable quality if: (a) the consumer to whom they are supplied causes them to become of unacceptable quality, or fails to take reasonable steps to prevent them from becoming of unacceptable quality; and (b) they are damaged by abnormal use. (7) Goods do not fail to be of acceptable quality if: (a) the consumer acquiring the goods examines them before the consumer agrees to the supply of the goods; and (b) the examination ought reasonably to have revealed that the goods were not of acceptable quality.

[21]

Ground 2

Early in the Tribunal Member's reasons for decision, reference was made to the provisions of the Australian Consumer Law 2010 being adopted in NSW pursuant to s28 of the Fair Trading Act 1987 (NSW). It was stated that those provisions applied to the proceedings. We are of the view that the references thereafter by the Tribunal Member to subsections of s54 "of the ACL" should be taken to be intended references to the ACL (NSW) (see s28 (1) of the Fair Trading Amendment (Australian Consumer Law) Act 2010 NSW.).
The Tribunal's reasons set out part of the report of Benjamin Roberts which referred to the "possible" cause that led to the major repair. The Tribunal Member stated that she was mindful of the use of the term "possible cause" and that the author did not state probable cause. The Tribunal Member stated that the standard of proof required was on the balance of probabilities and that the failure or defect that led to the need for the repairs was not readily apparent from the evidence before the Tribunal. The Tribunal Member then went on to say that the Tribunal was satisfied that the Appellant had not proved to the requisite standard what the problems were that necessitated the first repair. The Tribunal then concluded that since the Appellant had not been able to establish the cause of the problem, the Tribunal could not make a finding that the repairs required were as a result of a defect which would render the vehicle being not of an acceptable standard at the time of sale.
In reasoning in this way, the Appeal Panel is of the view that the Tribunal fell into error. The question which the Tribunal had to consider and answer was whether, at the time of the sale, the vehicle was of acceptable quality as that phrase is defined in s 54 (2) of the ACL NSW. In other words it was not necessary for the Appellant to prove that at the time of the sale, there was a particular identified defect which caused the vehicle not to be of an acceptable standard.
Overall, we conclude that the Tribunal erred in law when it asked itself the wrong question and failed to properly consider whether there was a failure to comply with the consumer guarantee of acceptable quality set out in s 54. This raises a question of law in respect of which the Appellant has a right to appeal. In these circumstances, we are satisfied that it is appropriate to set aside the Tribunal's order.

[22]

Conclusion on liability

As noted above, we have decided to substitute a decision for the Tribunal's decision.
We are satisfied that on the available evidence that the vehicle purchased by the Appellant was not of acceptable quality because it did not satisfy the requirements of s 54 (2) (a), (c) and (e) of the ACL NSW. In our view those conclusions result from the facts that this vehicle was purchased for $7,640 and after less than 8 weeks use in which the vehicle had travelled 5,133 kilometres, the engine would not work and it was necessary to replace that engine at a cost of $4,537.13 in order for the vehicle to operate again. We are further satisfied that the failure to comply with the consumer guarantee of acceptable quality was a major failure, in that the vehicle would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure: s 260(a) ACL NSW.
In coming to this conclusion, we have rejected the Respondent's submissions directed at liability. In particular, we are not satisfied that the evidence supports a conclusion that: 1. The use of the vehicle by the Appellant caused the problems with the vehicle or affected its durability; 2. The non-servicing of the vehicle when it had travelled 5,000 kilometres, was a failure to take reasonable steps to avoid the quality of the vehicle becoming unacceptable; and 3. Failure to regularly check oil levels, was a cause of the breakdown.
We are of the view that even if the facts relied upon to support the Respondent's submissions occured, they would not result in the vehicle being of acceptable quality. Further, even if prior to the purchase, the vehicle was not slow or sluggish or not overheating when the Appellant test drove it, it does not follow that the vehicle was of acceptable quality.
We are satisfied that no examination which the Appellant may have made of the car would have revealed the defect which caused the engine to fail, given the extent of the work apparently carried out by the Penrith Car Service in its attempt to find the defect which caused the engine to fail.

[25]

Appellant's submissions dated 3 June 2016

On 3 June 2016 the Appellant filed a written submission. Included in this submissions (the 3 June submission) was the following: 7. If the Appeal Panel accepts that the Tribunal below erred and that the car supplied by the respondent to the appellant breached the statutory warranties due to the fundamental failure of the engine, then the respondent wrongly failed to itself properly repair the vehicle or refund the appellant the purchase price: cf paragraphs 18 to 23 of the appellant's affidavit sworn on 14 May 2015 (Affidavit) and section 261 of the Australian Consumer Law (ACL). 8. Further, the respondent knew that the appellant had obtained finance to purchase the vehicle as it referred the appellant to "VehicleLoan City": paragraph 7 of the Affidavit (and the fact that payment was received by the respondent from Esanda). 9. Accordingly, the obvious consequence of the respondent's failure to: (a) supply a durable vehicle which was fit for its purpose or free from defects; and (d) ensure the vehicle was properly repaired or to refund the purchase price of the vehicle once it fundamentally failed; was that: the appellant was required to attempt to repair the vehicle through other means - which cost him an extra $2,500 and which held the obvious risk the repairs done by others would not be successful (and they weren't); the appellant was then without the vehicle and the appellant had to find other means of transport; and the appellant was left still owing money to Esanda for an entirely useless vehicle. 10. In these circumstances, if the respondent had complied with its statutory obligations then one of the obvious 'counter factuals' for the purpose of assessing compensation is that the respondent would either have properly repaired the vehicle itself or refunded the money. In the first circumstance, the appellant would have a vehicle he could use and he would be happily driving the vehiclehe bought from the respondent. In the second circumstance, he would have been able to quickly payout Esanda. It must also be kept in mind that the appellant had purchased the vehicle for use for his family and travel to work; upon the car's failure and the respondent's other breaches of its statutory duties, there was no obligation on the appellant to prioritise payment of Esanda over his and his family's need for transport which had been caused by the respondent's contravening conduct. The amount now owing to Esanda is plainly, and primarily, due to the respondent's contravening conduct. 11. In making orders under section 8 (1) of the CCA, section 13 (1) of the CCA requires that the orders be "fair and equitable to all parties to the claim". 12. If the appellant establishes that he has suffered loss and damage as a result of the respondent's conduct it cannot be "fair and equitable" to refuse to compensate him. 13. The rights and remedies set out in sections 259 to 266 of the ACL provide a framework for assessing the respondent's conduct as required by section 13 of the CCA having regard to the respondent's (lack of) compliance with its statutory obligations with respect to refunds and repairs and its conduct overall: cf section 13 (2) (e), (g) (vi) of the CCA. As the Appeal Panel observed at its first hearing in relation to the orders sought in the Notice of Appeal, the claim in this Tribunal is under the CCA and the only orders that can be made by the Tribunal are set out in section 8 in light of the obligation in section 13 of the CCA. 14. Accordingly, while the assessment under section 13 of the CCA may take into account the relevant provisions of the ACL, that is not the jurisdiction conferred on the Tribunal and to construe the Tribunal's powers as limited by the ACL is an error: cf Craig v South Australia (1995) CLR 163 at 177. 15. Ultimately, it may be that there is no difference in terms of establishing a right to damages under section 259 (4) of the ACL and fair and equitable compensation for the purpose of the CCA. But it is an error to view the Tribunal's powers as limited by those in the ACL.
When the vehicle was sold to the Appellant the Respondent breached s 54 of the ACL NSW. Because of those breaches Part 5 - 4 of the ACL, Division 1 - Subdivision A - Action against suppliers of goods, gave the Appellant the rights set out in that Subdivision.
The failure to comply with the relevant guarantee was a major failure (s 260 of the ACL NSW) with the result that s 259 (3) enabled the Appellant to (a) notify the Respondent that he rejected the vehicle; or (b) by action against the Respondent, recover compensation for any reduction in the value of the vehicle below the price paid by the Appellant.
Section 259 (4) also enabled the Appellant by action to recover damages for any loss or damage suffered by the Appellant because of the failure to comply with the guarantees if it was reasonably foreseeable that the Appellant would suffer such loss or damage as a result of such a failure.
Section 260 provides as follows: 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) 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.
If the failure had not been a major failure and if the failure could have been remedied within a reasonable time, s 259 (2) (a) would have enabled the Appellant to require the Respondent to remedy the failure within a reasonable time.
Section 261 deals with the situation where under s 259 (2) (a) a consumer requires a supplier of goods to remedy a failure to comply with a relevant guarantee. The section enables the supplier to comply with the requirements by repairing the goods or replacing them with an identical type or by refunding any money paid by the consumer for the goods. However that situation did not arise in this case because the failure was major and s 259 (2) (a) only applies if the failure is not a major failure.
The Appellant did not notify the Respondent that he rejected the car. So the only possible remedies available to the Appellant under the ACL NSW were to recover compensation under s 259 (3) for any reduction in the value of the vehicle below the price paid by the Appellant for the vehicleand damages under s 259 (4). However there was no evidence of a reduction in value.

[26]

Consideration of the Appellant's submission

In the following paragraphs we give consideration to the 3 June submission made on behalf of the Appellant.
We refer to [7] of those submissions. In [17] of his affidavit sworn 14 May 2015, the Appellant related a telephone call he made to the Respondent and informed Sam that the vehicle had broken down and he could not drive it. In [18] of the affidavit the Appellant stated that he was not offered a refund or told that there was anything else that he could do in this situation, except get the vehicle repaired. He said that the reason he had called Sam in the first place was because he thought Sam was responsible for the problem, as he only had the vehicle for such a short period of time. He did not state that he asked for a refund or that he rejected the car. Paragraphs [19] to [23] of the affidavit deal with Sam giving to the Appellant the telephone number of a repairer; the Appellant's calling AWN and being informed that he would need to take the vehicle to a repairer who was covered by AWN's warranty; the Appellant's organising for the vehicle to be towed to Penrith Car Service; AWN providing the Appellant with a summary of the problem with the vehicle and the repairs conducted; and the fact that the Appellant had to contribute a further $2,500 towards the cost of the repairs as the warranty company only covered $2,000 of that cost.
We take the reference to s 261 in [7] of the 3 June submissions to mean that that section imposed an obligation upon the Respondent to repair the vehicle or refund the Appellant the purchase price. As we have explained above, section 261 had no application to the facts of this case because the failure to comply with the guarantee was a major failure.
We therefore do not accept the submission made in [7] of the 3 June submissions.
We also do not accept the submissions made in [9] of the 3 June submissions. The vehicle was not entirely useless. The reference at [9(d)] (sic) of that submission again appears to be wrongly based upon s 261 of the ACL NSW. The facts that the vehicle travelled approximately 5,077 km from the date of purchase to the date of the first breakdown - and it was apparently used after 5 February 2014 (the last date of hiring a substitute car) with a substitute engine until early 2014 (the date of the second breakdown), shows that it was not entirely useless.
We do not accept [10] of the 3 June submissions. The Appellant was given rights under the ACL (NSW) but did not exercise all of them. We do not agree that the amount owing to Esanda is plainly and primarily due to the Respondent's contravening conduct. We are of the view that the Appellant owes the money to Esanda because he borrowed it and apparently has not been repaying the contracted instalments.
We do not agree with the submissions in [11] - [15] of the 3 June submissions. The Consumer Claims Act (NSW) (the CC Act) and now Pt 6A of the Fair Trading Act 1987 (NSW) (the FT Act), do not, of themselves, create any causes of action. They are predicated upon the existence of causes of action that arise independently from them. The cause of action may be founded upon contract, tort, debt, statute or any other sufficient basis in law. All that is required is that the cause of action is available under New South Wales law to the consumer at the relevant time and provides a legitimate legal basis for the consumer to make a claim of a type listed in s 3A (1) (a) to (e) of the CC Act, or the corresponding definition in Pt 6A, against the supplier. If there is such a claim and the other requirements in relation to jurisdiction are met, the Tribunal then has power to make orders of the types listed in s8 (now ss79N, 79O and 79P of the FT Act), having regard to the legal entitlements of the parties under the causes of action upon which the claims are based: Lam v Steve Jarvin Motors Pty Ltd [2016] NSWCATAP 186 at [164].
We are therefore of the view that it is not correct to say that "while the assessment under s13 of the CC Act may take into account the relevant provisions of the ACL …..": [14] of the 3 June submission. If the provisions of the ACL NSW were not taken into account in this type of case, the consumer would not have a cause of action based on the ACL NSW: see in particular the last sentence in [164] of Lam).
We do not agree with the submissions in [13] of the 3 June submission. Because the failure was a major failure there was no statutory obligation on the Respondent to repair the vehicle. The Appellant did not exercise his statutory right to reject the vehicle and thus there was no statutory duty on the Respondent to refund the purchase price: see ss 259 - 261 of the ACL NSW).
In the 3 June submission the Appellant referred to the requirement in s13 of the CC Act that when making an order the Tribunal must make such orders as, in its opinion, will be fair and equitable to all the parties to the claim. It was submitted by the Appellant that if he established that he had suffered loss and damage as a result of the Respondent's conduct, it could not be "fair and equitable" to refuse to compensate him (see [12] and [13] of the 3 June submissions). In [13] of the submission reference was made to s13 (2) (e), (g) (vi) of the CC Act.
In Lam at [136] it was stated that if the terms of s 13 (1) were thought to require the Tribunal to apply its own notions of fairness and equity when making orders rather than making orders in accordance with the applicable law, that would be an error.
After referring to the decisions of the Court of Appeal in O'Farrell v Allianz Australia Insurance Ltd [2015] NSWCA 48 and State Rail Authority v Consumer Claims Tribunal (1988) 14 NSWLR 473 the Appeal Panel in Lam stated that those decisions establish that s 13(1) does not have the effect of requiring or allowing the Tribunal to make orders otherwise than in accordance with the law. The Appeal Panel stated that what s13 (1) did was to provide an express statutory indication that the Tribunal, when exercising any discretion or making any evaluative judgment in determining what order should be made, should take into account what was fair and equitable having regard to the circumstances of all the parties.
Having regard to the rights given to the Appellant by the ACL (NSW) and the fact that the Appellant did not exercise the right of rejecting the vehicle or taking action against the Respondent to recover compensation for any reduction in value of the vehicle below the price paid by the Appellant, we are of the view that the orders it makes will be fair and equitable to each of the parties to the claims.
As mentioned above [13] of the 3 June submission also referred to s13 (2) (e) and (g) (vi) of the CC Act. Those subsections are in the following terms: (2) Without limiting subsection (1), when the Tribunal is considering whether or not to make an order or orders under this Part, the following factors are relevant, so far as they are material to particular circumstances of the case: … (e)whether any undue influence, unfair pressure or unfair tactics were exerted on or used against the claimant: (i) by any other party to the claim .. (g) where the subject of the claim is a contract for the supply of goods or services or a contract collateral to such a contract: …. (vi) the commercial or other setting, purpose and effect of the contract.
The Appellant has not brought to our attention any evidence of any undue influence, unfair pressure or unfair tactics. No submission was made that undue influence, unfair pressure or unfair tactics were exerted on or used against the Appellant.
The Appellant did not submit that some particular aspect of the commercial or other setting, purpose or effect of the contract, was such that it should result in a particular order being made.
We are therefore of the view that nothing has been raised by the 3 June submission, or any other submissions made on behalf of the Appellant which causes us to make an order different from the orders proposed to be made and which are set out at the end of these reasons for decision.

[28]

Findings on the claim in relation to out of pocket expenses

The Appellant has claimed payment of the following amounts which were paid by him after the first breakdown: 1. Registration of the vehicle $850.00 2. Green slip for the vehicle $585.38 3. Towing costs in December 2013 $184.00 4. Hire car costs incurred during the 5. period from approximately 17 6. December 2013 to approximately 7. 5 February 2014 $1588.19 8. The amount which the Appellant 9. had to contribute towards the cost 10. of the replacement motor and 11. associated costs of repairs $2,500.00
In our view, the payments of the $184, the $1,588.19 and the $2,500 are recoverable by the Appellant. They are recoverable as damages for losses suffered by the Appellant because of the failure to comply with the guarantee that the vehicle was of acceptable quality, as it was reasonably foreseeable that the Appellant would suffer such losses as a result of those failures: s 259 (4) ACL (NSW).
After the replacement of the engine replacement, the vehicle was driven for approximately 12 weeks when it broke down again.
After diagnosis, Penrith Car Service confirmed that the engine was overheating, running rough and misfiring. Upon further diagnosis it was found that the head gasket had blown between cylinders 1 and 3 and that due to the engine suffering from being overheated, it was suggested that the engine be replaced. The price quoted by Penrith Car Service to replace the engine was $5460.
However the evidence does not enable a finding to be made as to whether it was the replacement engine or the vehicle which caused the above problems after the engine was replaced. In these circumstances, we are not satisfied that the second breakdown was caused by the vehicle not being of acceptable quality at the time it was purchased.
We are therefore not satisfied that the Respondent is liable for any costs arising after the replacement of the engine, including the sum of $850.00 for registration of the vehicle and the $585.38 for the green slip. Both of those amounts were paid in March 2014, after the engine was replaced.

[29]

Findings in relation to the claim for payout of the sum owing to Esanda

The Appellant also claims an amount payable by him to Esanda which is in excess of $12,000 and has interest accruing at the rate of $3.42 per day. This represents the money borrowed by the Appellant to purchase the vehicle and the warranty: see above.
There was a significant difference between the vehicle when purchased by the Appellant in October 2013 and the vehicle when it broke down for the second time around the beginning of April 2014. The vehicle had different engines at those two points in time. As noted above, we are of the view that the first breakdown was caused by the vehicle as purchased not being of acceptable quality. However, the second breakdown could have been caused by the replacement engine. Unless on the balance of probabilities, the evidence excludes that possibility, it cannot be concluded that the cause of the second breakdown was a breach of s54 of the ACL (NSW) at the time of the original purchase in October 2013. In our view the evidence does not exclude that possibility. Accordingly we are of the view that the claims for payment by the Respondent to the Appellant of the amount owing to Esanda must fail.
The Appellant made submissions with the object of showing that there had been no "double dipping' by the Appellant. The Appellant concluded those submissions with a submission that any attempt to try and quantify a "benefit" received by the consumer is outweighed by the equally difficult task of quantifying the opportunity "loss" of the consumer not having what they contracted for. It was submitted that the balance struck by the ACL, being a refund of the purchase price without any deduction, reflects a principled basis for compensation (being that of putting the consumer back in the position they would have been but for the contravening conduct).
The reference to the refund of the purchase price in that submission appears to be based upon s 261 of the ACL NSW. However, for the reasons we have given above, that section had no application to the facts of this case.
A submission was made by the Appellant that the obvious consequence of the Respondent's failure to: 1. Supply a durable vehicle which was fit for its purpose or free from defects; and 2. Ensure the vehicle was properly repaired or to refund the purchase price of the vehicle once it fundamentally failed; was that: 1. the Appellant was required to attempt to repair the vehicle through other means - which cost him an extra $2,500 and which held the obvious risk the repairs done by others would not be successful (as they were not); 2. the Appellant was then without the vehicle and had to find other means of transport; and 3. the Appellant was still left owing money to Esanda for an entirely useless vehicle.
The reference at (b) of that submission again appears to be based upon s 261 of the ACL (NSW).
We are of the view that it is not correct to say that the vehicle was entirely useless. The facts that it travelled approximately 5075 km from the date of purchase to the date of the first breakdown - and it was apparently used after 5 February 2014 (the last date of hiring a substitute car) with a substitute engine until early April 2014 (the date of the second breakdown), shows that it was not entirely useless.
The Appellant made further written submissions on 28 October 2016. These further submissions summarised the Appellant's submissions on loss and damage. The only new submissions were in relation to the expenditure for registration and green slip. It was submitted that the costs expended on those items were wasted on a vehicle that did not justify that expenditure given its limited life span. That submission does not alter the conclusions expressed above on the claims for registration of the vehicle and the green slip. A claim made in earlier submissions of $300 for repairs in March 2014 was not included in these submissions and we take it that that claim is no longer pressed.

Matumaini v Automobile Industries Pty Ltd

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Cited By (16)