Nicol v Suzuki Australia Pty Ltd

NCAT Consumer and Commercial|2021-08-23

Introduction

The Applicant, Mr Owen Nicol, purchased a new Suzuki Vitara RT‑XT Turbo Diesel 4WD Auto (vehicle) on 11 September 2017 from Scuderia Veloce Motors at Chatswood (SVM). SVM was at that time a licensed Suzuki dealer
The First Respondent, Suzuki Australia Pty Ltd, is the manufacturer and/or importer of the motor vehicle to Australia.
The Second Respondent, CKD Automotive Pty Ltd t/as Pennant Hills Suzuki, is the Suzuki dealer at Pennant Hills who serviced the vehicle at relevant times in or after 2019.
The Applicant claims that the vehicle, after multiple attempts to resolve a transmission shudder, was unable to be repaired by the Respondents.
The Applicant seeks damages both under the Manufacturer's Warranty against the First Respondent, and against the Second Respondent for a refund for repairs that he claims failed to successfully repair the transmission fault.

Background

The evidence before the Tribunal was generally a reconstruction of sale and service records of the vehicle to the Applicant in and after September 2017.
On 11 September 2017 the Applicant purchased the vehicle registration number DQL‑57H from Scuderia Veloce Motors at Chatswood. This dealer shortly after ceased to be a Suzuki dealer but nothing seems to arise from that between the parties.

Claim for loss and damage

The Applicant makes the following claim as a result of the above matters: Item Description Amount
Repair to transmission $6,028.00
Replacing gearbox oil $250.00
Towing charges $143.00
Expert report of David Marston $3,025.00
Loss on sale of the vehicle $11,690.00
Unnecessary registration and CTP $372.90 Total $21,508.90

The Applicant also claims for registration costs for the vehicle during the time the vehicle remained at the Second Respondent and insurance costs for the vehicle for the duration of the time the vehicle remained at the Second Respondent.

Expert evidence

At AB45‑136 of the Applicant's bundle is an expert report of David Marston who examined the vehicle in October 2020. In his expert report, Mr Marston made the following findings: 1. Firstly, there were signs of normal usage present in the clutch assembly parts returned to the Applicant after it was replaced by the Second Respondent. There were no signs in that clutch assembly of "hot spots" such as deep blue streaks or patches, scoring or burn marks in the pressure plates or grooves in the metal of the pressure plates. 2. Secondly, there was a difference in wear between the clutch plate and pressure plate in the clutch assembly. The Second Respondent on 24 September 2020 had measured the odd clutch plate assembly and noted the wear was okay however the even clutch assembly was worn to its limit of 4.5 mm. Only one clutch plate was apparently returned to the Applicant by the Second Respondent. 3. Thirdly, it is not reasonable for a vehicle only 2 years old to require a transmission rebuild with multiple major internal parts and the clutch assembly replaced when it had only travelled approximately 55,000 kms and was still under a new car warranty. 4. Fourthly, Marston was of the opinion that the vehicle was not fit for purpose and had a hidden defect in the gearbox assembly which was not apparent until it presented itself at approximately 55,000 kms. 5. Fifthly, Marston considered that the gearbox failing at 55,000 kms demonstrated the gearbox was not of acceptable quality as the failed gearbox was substantially unfit for the purpose for which goods of the same kind are commonly supplied. 6. Sixthly, that the failure of this gearbox was a major failure or major defect which had existed in the vehicle since manufacture.

First Defendant's evidence

Suzuki Australia Pty Ltd submitted a 2 page letter/report dated 30 July 2021 in respect of the vehicle.
The First Respondent's evidence was to the following effect: 1. The First Respondent, the Australian distributor of Suzuki trucks and cars, was first notified of clutch issues in the vehicle on 3 August 2020 and was then supplied with numerous photos showing material wear on the clutches, that the vehicle had travelled 82,839 km and was then 35 months old. 2. The Second Respondent's first repair order stated there was a concern about this issue at approximately 62,000 km but the First Respondent had no knowledge of this concern at that time. 3. The Second Respondent twice attempted to rectify the shudder by first, replacing the transmission fluid and secondly, by performing a re‑learn of the transmission. 4. These attempts did not rectify the transmission issue and some 20,000 kms later the clutch assembly was dismantled to identify the cause of the harsh shifting. At this point the Second Respondent advised the Applicant that the matter was considered a retail repair and not under warranty but approached the First Respondent for warranty/goodwill support at the request of the Applicant. 5. Support was declined by the First Respondent as this was simply resolved as worn clutch material and not considered a warrantable item. 6. Repairs that were undertaken by the Second Respondent did take longer than usual before the vehicle was returned to the Applicant. The Second Respondent advised then that the vehicle was "functioning correctly". 7. Following the clutch replacement and the return of the vehicle, the First Respondent was made aware of a new concern which occurred intermittently. A DTC (Diagnostic Trouble Codes) was logged in the vehicle's computer (unrelated to the transmission) which was rectified by replacing the brake pedal switch. 8. At this point and after extensive test driving the vehicle was apparently working correctly. The Second Respondent disputes that repairs were not performed correctly and which resulted in the Applicant disposing of the vehicle. 9. If the Applicant had evidence that repairs undertaken by the Second Respondent were not performed correctly, the First Respondent would have expected that the Applicant would return the vehicle to the Second Respondent for rectification. But instead he chose to sell the vehicle.
The First Respondent adduced no independent expert evidence in response to the Applicant's claim.

The Second Respondent's evidence

The Second Respondent compiled a bundle of documents relating to all the service visits that the vehicle had had to the Second Respondent on and after its 60,000 km service on or about 15 October 2019 when the Second Respondent first became involved. Most of these documents were contained in the Applicant's bundle.
The Second Respondent produced no expert evidence in respect of the vehicle's condition or prognosis. Both respondents allege that because the Applicant had sold the vehicle in about June 2021, it precluded them from proving to the Applicant that the transmission issue and other issues with the vehicle had finally been solved and that the vehicle was serviceable.

The Applicant's Causes of Action

During the hearing the Applicant summarised the causes of action which he had as follows: 1. First, there was an action against the selling dealer, Scuderia Veloce Chatswood, for damages for breach of express and implied warranties contained in the contract for sale of the vehicle, including the dealer's warranty. The Applicant considered that damages from these breaches were reasonably foreseeable and subject to the second limb of Hadley v Baxendale. The Applicant conceded however that Scuderia Veloce Chatswood, which sold him the vehicle and shortly after ceased to be a Suzuki dealer and played no further part in the service of the vehicle, had not been joined as a respondent and therefore this cause of action could not succeed; 2. An action against the First Respondent as manufacturer and/or importer of the vehicle to Australia pursuant to s.54 of the Australian Consumer Law (ACL) - guarantee as to acceptable quality. The Applicant was a consumer pursuant to s.3 of the ACL and purchased the vehicle as goods, in trade or commerce, and the vehicle was not, in breach of s.54(2)(a) of the ACL, fit for all the purposes for which goods of that kind are commonly supplied, and in breach of s.54(2)(c) they were not free from defects. 3. The Applicant also claimed an action under s.59 of the ACL in that there is an express warranty given by the First Respondent in relation to the vehicle and that s.59(2) of the ACL required the First Respondent to comply with any express warranty given or made by the supplier in relation to the goods. The new car warranty provided by the First Respondent, outlined above, is for a period of 36 months or 100,000 km. The transmission issue arose within that time period. 4. As a result of these breaches, the Applicant claimed an action against the First Respondent pursuant to s.271(1) of the ACL and s.271(5) of the ACL to recover damages against the manufacturer. The Applicant also claimed damages pursuant to s.272(1)(a) and (b) of the ACL which quantified the losses or damage claimed by the Applicant. 5. The Applicant also claimed a refund of the amounts paid for service and repair to the Second Respondent in respect of the vehicle's transmission as, according to his evidence, the service and repairs undertaken by the Second Respondent on the vehicle were otiose and of no effect.
The Applicant also said that the transmission issue in the vehicle was a "major failure" within the meaning of that term within s.260 of the ACL, which provided special remedies to the Applicant such as a replacement of the vehicle by the First Respondent. In this instance, and because the Applicant had disposed of the vehicle by the time of the hearing in the Tribunal, the Applicant seeks compensation in the manner and amounts outlined above.

Consideration

The hearing proceeded before the Tribunal by telephone and in a respectful manner. The Applicant acknowledged that the Second Respondent, who was only introduced to the vehicle when the transmission issue arose in August 2019, had used its best endeavours unsuccessfully to repair the transmission issue between August 2019 and May 2021.
Both Respondents complained that the Applicant had disposed of the vehicle in May 2021 shortly after it had been repaired by the Second Respondent. The First Respondent in particular claimed that it had only recently become involved with the vehicle in respect of the transmission issue and had only had a limited opportunity to assist the Applicant.
The Second Respondent also claimed that the vehicle was repaired and operating normally after it was returned to the Applicant in May 2021. In fairness, the Second Respondent had claimed that previously in relation to the vehicle on several occasions between August 2019 and May 2021 when it was not the case.
The evidence discloses that the First Respondent since at least July 2020 was aware of the transmission issue in the vehicle and had declined to repair the vehicle under warranty. The responses of the Respondents to the Applicant's request for support and assistance under the warranty were not transparent.
First, on 28 July 2020 the Second Respondent advised the Applicant that the First Respondent would not cover the transmission issue under warranty because the wear on the clutch plate was due to "excessive towing". The Applicant's evidence clearly discounted this.
Then on 4 August 2020 when the transmission issue became apparent and on the third visit to the Second Respondent it decided to repair the clutch plates in the transmission, but it declined to acknowledge that as a warranty issue, and considered it "fair wear and tear" and a retail repair.
Neither of these responses of the Second Respondent were factual or transparent based upon the evidence before the Tribunal.
Thirdly, the transmission issue became materially worse after the Second Respondent had removed and repaired the transmission in September 2020. New issues arose that had not existed prior to that work being undertaken.
The Applicant complained in his written evidence that in respect of most occasions that the vehicle was left with the Second Respondent for either diagnostic or repair work, that there was no exchange of information, invoice or payment when he picked up the vehicle. In other words, he received little information about the precise work undertaken on the vehicle by the Second Respondent and whether, and if so how, it might repair the transmission issue finally.
This was highlighted at the hearing when the Applicant was advised of the following two matters: 1. First, that certain rods had been bent when the transmission was put back into the vehicle in September 2020 which may have resulted in the further complications that arose (and not the transmission issue itself); and 2. That the DTC which appeared on the vehicle dashboard between January - March 2021 and which was apparently fixed at the Second Respondent's premises in April 20201, was a different issue to the transmission issue which had bedevilled the vehicle prior to September 2020.
However no steps were apparently taken to inform the Applicant of this, namely why the transmission issue was not resolved in September 2020 and what the separate issue was in relation to DTC in 2021. This may have gone some way to convincing the Applicant that by April 2021 the vehicle was finally repaired and that the Applicant should not dispose of it.
By April 2021, the vehicle had been to the Second Respondent approximately 6‑7 times for diagnostic or repair work, including two lengthy stays of approximately 5 weeks between July 2020-September 2020 when the transmission was repaired and December 2020-January 2021.
By the time the Applicant disposed of the vehicle in May 2020, he had had an initial trouble‑free period of ownership with the vehicle from September 2017 - August 2019 (23 months), followed by a continually troubled period with the vehicle and the transmission issue and subsequent issues between August 2019 - May 2021 (about 21 months).
In other words, the vehicle was defective for approximately half the period of the Applicant's ownership in a way that neither the First nor Second Respondent could ultimately resolve.
The facts in this application are similar to those in Safi v Heartland Motors Pty Limited t/a Heartland Chrysler [2015] NSWCATAP 80 at [6] - [10]. In that case however the transmission problem arose within 3 months of purchase of the new vehicle. The issue there was whether the transmission failure was a "major failure" for the purposes of s.260 of the ACL.
The Appeal Panel in Safi's case considered this in some detail. Unlike this application, Mr and Mrs Safi did not produce an expert report about the nature and extent of the transmission issue to support their case, but this was not considered fatal to their claim.
Safi's case said that s 260 of the ACL (NSW) sets out five measures against which non‑compliance is to be assessed for the purposes of determining whether there is a "major failure". As observed in Boyd v Agrason Pty Limited [2014] VMC 23 at [50], for there to be a major failure it was not necessary for the claimant to establish each of the matters set out in s.260 of the ACL, establishing one is sufficient. This is clear from the drafting of the section.
Section 260 of the ACL states: "(1) A failure to comply with a guarantee referred to in s.259(1)(b) that applies to a supply of goods is a major failure if: (a) the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or (b) the goods depart in one or more significant respects: (i) if they were supplied by description - from that description; or (ii) if they were supplied by reference to a sample or demonstration model ‑ from that sample or demonstration model; or (c) the goods are substantially unfit for a purpose for which goods of the same kind are commonly supplied and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or (d) the goods are unfit for a disclosed purpose that was made known to: (i) the supplier of the goods; or (ii) a person by whom any prior negotiations or arrangements in relation to the acquisition of the goods were conducted or made; and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or (e) the goods are not of acceptable quality because they are unsafe"
At the hearing the Applicant submitted that the continuing failure of the vehicle with the transmission issue and the inability of the First Respondent or alternatively the Second Respondent to repair the vehicle adequately at all over a period of almost 2 years constituted a major failure for the purposes of the ACL. The Applicant relied upon s.260(1)(a) and s.260(1)(c) of the ACL. The Tribunal considers that on the Applicant's evidence, these grounds have been established.
The Tribunal finds that the Applicant was a consumer pursuant to the Fair Trading Act 1987 (NSW), that the contract for the purchase of the vehicle was entered into in NSW under NSW law and therefore that the Tribunal has jurisdiction pursuant to the provisions of the Fair Trading Act 1987 (NSW) and the ACL to resolve this dispute.
The Tribunal finds that the failure of the vehicle as a result of the transmission issue between August 2020 and May 2021 is a "major failure" pursuant to s.260 of the ACL and in breach of the guarantee under s.54 of the ACL. The Tribunal accepts the evidence of the Applicant's expert, Mr Marston, to this effect and that the transmission issue was a latent defect. Notwithstanding that it did not arise immediately or shortly after purchase, it became patent within the warranty period offered by the First Respondent and should have been repaired within a reasonable time thereafter.
The Tribunal accepts that the Applicant mitigated his losses by selling the vehicle at a wholesale auction and at a discounted price to avoid warranties having to be provided in respect of the sale of the vehicle. The First and Second Respondent criticised this course of action on the basis that it did not permit them suitable opportunity to convince the Applicant that the transmission had been resolved once and for all or, alternatively, that the DTC appearing on the vehicle's dashboard were unrelated to the transmission issue. But respectfully the Respondents had had almost 2 years to take these steps by that time.
It is unclear why some simple communication was not made to the Applicant to this effect but it appears not to have been. In these circumstances, especially as the Applicant used the vehicle to travel to regional NSW late at night and in inclement winter weather that any such further failures of the vehicle could have serious consequences.
The Tribunal's finding that the transmission issue was a "major failure" pursuant to s.260 of the ACL is a finding supported by the expert evidence of David Marston, the Applicant's expert, in his expert technical report dated 3 November 2020. This expert evidence was not challenged during the hearing.
The Tribunal therefore finds for the Applicant in respect of his claim. The Tribunal determines that the Applicant's loss to the Second Respondent is the cost of the Second Respondent's attempts to repair the transmission issue unsuccessfully and that these should be refunded to the Applicant. These sums include $6,028.00 for repairs to the transmission and $250.00 replacing gearbox oil in the transmission, a total of $6,278.00.
The Tribunal determines that the balance of amounts claimed by the Applicant, with some modification, should be payable by the First Respondent. These include the sum of $7,500, a halfway position between the $16,000 net return which the Applicant obtained at wholesale auction for the vehicle and its current retail sale price range of $22,000‑$25,000 assessed by Mr Thomas Dawking of NSW Auto Traders (AB156).
To this should be added the towing charges of $143.00 incurred by the Applicant in returning the vehicle to the Second Respondent on 8 December 2020 and the sum of $3,025.00 paid by the Applicant to David Marston for his expert report on the state of the vehicle which should have reasonably persuaded the First Respondent or the Second Respondent that the transmission issue constituted a 'major failure' for the purposes of s.260 of the ACL .
The Tribunal declines to include registration or insurance costs in the sum of $372.90 incurred by the Applicant as being too remote. In any case, the Applicant did receive some benefit in the period August 2020 - May 2021 after the transmission issue became evident and prior to the sale of the vehicle. During that time, the Applicant notwithstanding the transmission issue still travelled more than approximately 35,000 kms in the vehicle.

Orders

The Tribunal orders the First Respondent to pay the Applicant the sum of $10,668.00 within 28 days.
The Tribunal orders the Second Respondent to refund the Applicant the sum of $6,278.00 within 28 days.

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: 07 December 2021

Fair Trading Act 1997(NSW)

At a glance

Court

Decision date

Source

Judgment (11 paragraphs)

Parties

Legislation Cited (3)

Cases Cited (3)