Nakrour v Kia Australia Pty Ltd & Anor [2023] QCAT 169

[2] Mr Nakrour experienced problems with the vehicle, he says, within about 5 days after purchase.

[3] He also says he returned to the dealership and complained about problems with the car including rough shifting of gears and jerking and slipping transmission, slow change of gears, a problem with the navigation and sound system in the vehicle (the head unit), a whirring or whining noise like a turbine and traction and stability problems.

[4] The vehicle was still covered by a 7 year Kia Australia Pty Ltd ('Kia Australia') warranty and RCG referred him to Toowong Kia representing Kia Australia Pty Ltd .

[5] Toowong Kia "reset" the transmission on 25 January 2021 under warranty. He was advised the sound system amplifier was defective and a new amplifier would be ordered under the warranty.

[6] He says the other problems he had complained about were not addressed.

[7] He continued to experience problems with the vehicle and he discovered other defects: loss of power when the engine was under stress; the gearbox faults worsened; the audio head unit had problems and the visual display screen rolled and jumped and there was white smoke emitting from the exhaust.

[8] He reported these new problems to Toowong Kia. They provided him with a recorder the record the gearbox faults and Kia Toowong sent the recordings he made to Kia Australia but he was not advised of any conclusions drawn from the records.

[9] Subsequently the shifting between gears became sudden and rough through every gear. The vehicle would have to be stopped and restarted to return to normal.

[10] On 3 February 2021 he emailed a notice to RCG entitled "Notice to fix a defect under the statutory warranty". In the document he referred to the transmission fault first reported on 8 January 2021, the stability control issue with the car slipping on wet roads, the car vibrating on initial start in the morning, the continued problem with the sound system and the air-conditioner fan making noise.

[11] Mr Nakrour advised he would deliver the car to a repairer nominated by RCG no more than 20 km from the car dealership but if he did not have a response within 5 days he would deliver the car to RCG.

[12] He says the notice was ignored, although it seems he was asked by Toowong Kia to present the vehicle to them for further inspection. He did that, returning the vehicle but finding after 10 return inspections over nearly 4 months no further diagnosis of the problems made.

[13] On 23 April 2021 he complained to the Office of Fair Trading, Queensland and then on 26 April 2021 he advised Kia Australia that the defects constituted a major failure of an Australian Consumer Law ('ACL') consumer guarantee and that he exercised his right to reject the vehicle and demand a "brand-new identical replacement of same type or higher". His demand was refused.

[14] On 25 November 2021 Mr Nakrour filed a Motor Vehicle Dispute in the Tribunal seeking the following relief:

to force Kia Australia as the vehicle manufacturer to comply with the provisions of the Australian Consumer Law through replacing the existing vehicle with an identical brand-new vehicle;

forcing Kia Australia and RCG to indemnify him by paying him $15,000 for not responding to his requests for a remedy under the consumer guarantees, and for contravening the provisions of the ACL which prohibit misrepresentations and misleading or deceptive conduct;

imposing or notifying the ACC to impose the highest penalty stipulated by ACL against Kia Australia and RCG for their engagement in conducts (sic) that breach the Australian Consumer Law.

[15] Kia Australia filed a response to the claim on 14 January 2022 in which they say the car was presented at Toowong Kia on a few occasions regarding transmission, audio and air-conditioning concerns. The transmission issue was being addressed by the dealership but required to be finalised. Audio concerns were diagnosed which required an amplifier replacement (which was still with the dealer RCG). The air-conditioning whistle complaint could not be replicated. Kia Australia had not sold the vehicle to Mr Nakrour. Both Toowong Kia and Kia Australia had asked Mr Nakrour to present his vehicle for further diagnosis but he had refused.

[16] RCG filed a response on 26 May 2022 saying none of the complaints made by Mr Nakrour were present or discernible in the vehicle at time of sale. RCG had referred him to Kia Australia to have the vehicle repaired under Kia warranty and after that initial referral RCG had not heard back from him until April 2021 when he presented the vehicle at RCG and complained only about a continuing issue with the transmission. RCG could not replicate the defect complained about and was not satisfied there was a genuine ongoing issue with the vehicle. Despite that, they had offered to purchase the vehicle back from him for $23,500, $5,000 less than his original purchase price, which offer he refused. They had had no further dealings with Mr Nakrour until service of his application for Motor Vehicle Dispute in the Tribunal at which time they offered him full refund for the vehicle of $28,500. Mr Nakrour refused that offer on the basis he was entitled to claim a new vehicle from them, not used.

[17] The Tribunal appointed an assessor to provide a report about the vehicle. The assessor inspected the vehicle on 4 May 2022.

[18] The assessor found the manual shift release had to be used to select any gear. The audio head unit was clearly faulty, telephone contact names could not be stored nor the correct time set and the screen rolled intermittently and appeared to shudder.

[19] There was no evident white smoke coming from the exhaust. There was no evidence of loss of coolant from the cooling system. The shudder of the engine from cold start could not be replicated because the engine was run hot for the test. There was no evident whirring or winding sound detected. A test on a slippery road surface indicated there was a system fault with the traction control however. Whilst testing the vehicle in normal traffic the performance appeared to be normal without evidence of lack of performance. The air-conditioning system was not functioning and therefore any noise related to its use could not be tested.

[20] The assessor states in his report that he found the transmission harsh and it appeared to slip on occasions and the transmission gear selector auto release function was not working. The assessor believed the transmission concerns would require further investigation by a transmission expert but he suspected the fault was internal.

[21] In his opinion there was a definite concern with the head unit. He was not convinced simply replacing the amplifier would rectify the faults found at time of testing.

[22] The traction control function was of concern because the wheels skidded on normal road surfaces.

[23] In the assessor's opinion the problems he found with the vehicle would most probably have been present when the vehicle was purchased.

[24] Mr Nakrour also provided a report from auto repairers, Western Suburbs Automatics dated 23 July 2021. The report mentions very harsh shifting from 1st to 2nd gear at light throttle and harsh shifting from 3rd to 2nd when shifted manually. The person writing the report could not say whether the fault was of minor or major significance. Insofar as the question was asked was the car safe to drive, the comment was "personally I would not recommend it".

[25] The assessor was not called by any party to give further evidence. Accordingly it is unclear how significant the problem with respect to the transmission is and how serious the slipping traction control function.

[26] Nor was the person who made the report for Western Suburbs Automatic called. The observation made at conclusion of the report however, that the person reporting would not recommend the car be driven because of safety concerns, is significant.

[27] Mr Nakrour's evidence was not challenged in any meaningful way by the representatives for the respondents, save Mr Nakrour's evidence that RCG never offered to refund him his purchase price but only offered that price less $5,000. Mr Tully maintained that offer had been made but Mr Nakrour denied it.

[28] Apart from that, neither respondent's representative challenged Mr Nakrour's claims or evidence of vehicle failures.

[29] For Mr Nakrour's part, he accepted the assessors report and did not challenge the findings made by the assessor.

[30] The evidence is sparse but I make the following findings on what is available.

[31] I find that the vehicle's transmission and traction control and "head unit" were found defective within a very time after purchase. I accept the assessor's contention that it is more likely than not that those problems existed at time of purchase.

[32] I accept Mr Nakrour made reasonable attempts to have the problems remedied by either the seller, RCG, or the manufacturer Kia Australia, over a period of approximately 4 months following purchase, but to no avail through no fault of Mr Nakrour.

[33] The observation by Western Suburbs Automatic that the car was not safe to be driven in the condition in which the vehicle was presented to them for inspection on 23 July 2021 was not challenged by the respondents and therefore should be given weight, regardless that the maker of the report was not called to give evidence.

[34] Having said that, Mr Nakrour has continued to drive the vehicle despite the warning by Western Suburbs Automatic and as at time of inspection by the assessor it had travelled 127,652 km, a distance of 24,652 kilometres. I determine that shows more poor judgement on the part of Mr Nakrour than detracts from a finding, which I make, that the vehicle was not safe to drive.

[35] Based on my findings I determine that the vehicle was not of acceptable quality and free from defects and safe and durable as a reasonable consumer fully acquainted with the state and condition of the vehicle, including the hidden defects, would regard as acceptable given the price paid and age of the vehicle as at date of purchase.

[36] I further find that the vehicle would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the problems concerning the transmission and slipping traction control and head unit and particularly so insofar as the vehicle is unsafe.

[37] The guarantee as to acceptable quality under s 54 ACL has therefore been breached. The breach is a major failure of guarantee.

[38] Pursuant to s 259 ACL if the failure is major the consumer may reject the goods or by action against the supplier recover compensation for any reduction in the value of the goods below the price paid.

[39] There is no evidence before me as to the reduced value of the goods attributable to the defects.

[40] Mr Nakrour has chosen to reject the goods in his email dated 26 April 2021.

[41] Rather than seek a replacement vehicle of the same type and of similar value however, Mr Nakrour seeks replacement of the used vehicle 5 years old and having travelled 103,000 kilometres as at date of purchase with a new vehicle. That is not a vehicle of the same type and value. That is not a remedy available under the legislation.

[42] Given Mr Nakrour makes no claim for replacement by another used vehicle of the same type and of similar value, the only appropriate remedy remaining is that he be refunded the purchase price of the vehicle and he return the original vehicle to the seller, RCG. The refund is payable by RCG, the seller who sold the vehicle.

[43] By s 271 of the ACL, breach of the s 54 acceptable quality guarantee permits an affected person to also recover damages from a manufacturer. Here the manufacturer is Kia Australia.

[44] Mr Nakrour seeks to be "indemnified" by both respondents to an amount of $15,000. He bases that on their failure to respond to his requests for a remedy under the consumer guarantees. He offers no explanation how he has suffered any loss or damage in addition to his initial expenditure for the vehicle, which he will now be recovering. I can make no award for additional damages in the absence of evidence that he suffered additional damage.

[45] Mr Nakrour refers to misrepresentations and misleading and deceptive conduct on the part of the respondents. The Tribunal has no jurisdiction in respect of such matters. The Tribunal has only the limited jurisdiction that appears in the list of matters in s 51 Fair Trading Act 1989 (Qld). Damages for misleading and deceptive conduct is not a Tribunal matter.

[46] As to the relief sought relating to imposing or notifying 'ACCC' that the highest penalty available under the ACL be imposed against the respondents, leaving aside the fact that I'm not persuaded there has been misrepresentation or misleading at deceptive conduct and the only breach seems to be breach of the guarantee as to acceptable quality, the Tribunal, a State court of record, has no jurisdiction to require or demand any such steps be taken by the Australian Competition and Consumer Commission, an independent Commonwealth statutory authority.