Nicol v Suzuki Australia Pty Ltd

Background

1. 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.
2. 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.
3. A copy of the Contract for Sale of the vehicle appears at Applicant's bundle pp2‑4 (AB2-4).
4. In the Contract the vehicle was described as "RT‑X Turbo 4WD Diesel LY MY17 5V Wagon 1.6L Auto 4CYL 2017". It was a white vehicle with black trim, had a build date of May 2017 and a compliance date of August 2017. The price of the vehicle was $35,990 but including allowances and dealer charges, the Applicant appeared to pay a nett sum of $34,700 to Scuderia Veloce Motors, Chatswood.
5. The SVM Dealer warranty contained in the Contract read as follows: "Our goods come with guarantees that cannot be excluded under the Australian Consumer Law. You are entitled to a replacement or refund from major failure and for compensation for any other reasonably foreseeable loss or damage. You are also entitled to have the goods repaired or replaced if the goods fail to be of acceptable quality and the failure does not amount to a major failure." (AB4)
6. There is also a warranty from the First Respondent which relevantly stated: "3. Warranty Period This Warranty shall begin from the date the Retail Delivery Advice (RDA) is recorded on the SAPL Warranty System indicating the vehicle has been sold to the first retail purchaser (or in the case of a Dealer demonstrator model, when the Dealer first placed it into service) and shall continue for 36 months or 100,000 kilometres (whichever occurs first) ("Warranty Period"). The recorded date of the RDA may be earlier than the date of delivery. Please contact your authorised Suzuki Dealer if you have any questions." (AB42)
7. On 28 September 2017 the Applicant took the vehicle to Scuderia Veloce Motors, Chatswood for its initial service having driven 1,089 km.
8. On 25 February 2018 the Applicant took the vehicle to a service at Karl Knudsen Automotive, Chatswood, the vehicle having travelled 11,355 km.
9. On 6 June 2018 the Applicant took the vehicle to a service at Karl Knudsen Automotive, Chatswood, the vehicle having travelled 21,008 km.
10. On 17 September 2018 the Applicant took the vehicle to a service at Karl Knudsen Automotive, Chatswood, the vehicle having travelled 30,997 km.
11. On 12 February 2019 the Applicant took the vehicle to a service at Karl Knudsen Automotive, Chatswood, the vehicle having travelled 42,005 km.
12. On 27 June 2019 the Applicant took the vehicle to a service at Karl Knudsen Automotive, Chatswood, the vehicle having travelled 51,888 km.
13. Up to this point there was no apparent issue with the vehicle. The vehicle's service book was stamped by Karl Knudsen Automotive for the second to sixth services referred to above (AB117‑119).
14. The first hint of trouble appears to have arisen in or about August 2019. The Applicant says he first noticed a rough "clunking" sound emanating from the engine of the vehicle at the time it was changing gears. The vehicle had travelled approximately 55,000 km.
15. The Applicant gave evidence that from about that time, he could also sense a shudder or vibration coming from the engine bay of the vehicle, presumably from the transmission. It occurred typically when the vehicle was changing from first to second gear on take-off, and would occur intermittently, including either when the vehicle was starting from a stationary position as it changed from first to second gear or when it was travelling up a hill at low speed (transmission issue).
16. On or about 15 October 2019, and on the advice of his mechanic, Karl Knudsen, the Applicant took the vehicle to a Suzuki dealer as he believed this transmission issue could be a warranty claim.
17. On or about 15 October 2019 the Applicant took the vehicle to the Second Respondent, Pennant Hills Suzuki, for its 60,000 km service and to report the transmission issues. This was apparently the first involvement of the Second Respondent.
18. Service tax invoice #SZPR680324 of the Second Respondent dated 15 October 2019 contained the following entry (AB30-32): "Job #2 06SZZZZZZZ001 Diagnose Tech(s): 669 No charge Clunk from transmission when changing from first to second gear Happens intermittently for about a month. FOUND THE ACTUATOR FLUID LEVEL IS OKAY. FOUND THE TRANSAXLE LEVEL IS LOW. REQUIRES THE TRANSAXLE OIL BEFORE FURTHER DIAGNOSIS. CUSTOMER QUOTED $250 FOR THE TRANSAXLE OIL FILL."
19. The vehicle was returned to the Applicant but the Applicant states that the transmission issue outlined above had not been rectified. It continued to be present intermittently when the Applicant drove the vehicle.
20. In about February 2020 the Applicant arranged for the Second Respondent to replace the transaxle oil (gearbox oil) of the vehicle. The tax invoice of Pennant Hills Suzuki for this #SZCR689305 dated 20 February 2020, which is at AB33, confirms this.
21. The Applicant gave evidence that he is a 74 year old practising solicitor who lives at Warrawee. He typically used the vehicle to travel to his farm in Hampton, near Lithgow, in the Blue Mountains for the weekend. Because he travelled there and back on motorways and at motorway speeds and in a high gear, the transmission issue at that time did not greatly interfere with his use of the vehicle. The Applicant says he was "prepared to allow Suzuki time to try to identify and rectify the issue".
22. On 28 May 2020 the Second Respondent carried out a log book service on the vehicle and again attempted to rectify the transmission issue. A service tax invoice of Pennant Hills Suzuki #SZPR695771 dated 28 May 2020 (AB34-36) states: "Job #2 06SZZZZZZZ001 Diagnose Tech(s): 635 No charge. Check transmission thuds between first to second intermittently. Confirm shudder from first to second. Further time required for diagnosis."
23. Following this service and the return of the vehicle, the Applicant noticed that the transmission issue still had not been rectified and continued to be present, intermittently, when driving the vehicle.
24. On 4 June 2020 the Applicant arranged for the vehicle to be returned to Pennant Hills Suzuki to further investigate and diagnose the transmission issue. At this time Pennant Hills Suzuki tax invoice #ZSZCR696374 dated 4 June 2020 (AB37-38) stated: "Job #3 06SZA01 Generic Tech(s): 645 No charge. Check shudder from first to second. Confirmed on previous RO695771. Carried out transmission re-learn. Customer to monitor."
25. After this service and the return of the vehicle, the Applicant noticed the transmission issue still had not been rectified and continued to be present intermittently when he was driving the vehicle.
26. On or around 28 July 2020 the Applicant arranged for the vehicle to be returned to the Second Respondent for the purpose of identifying and rectifying the transmission issue. During this service, the Applicant had a conversation with Jackson Spanjaard of the Second Respondent who informed him that Suzuki would not cover the transmission issue under warranty. Mr Spanjaard told the Applicant that the clutch plate was worn not as a result of normal use but which appeared to be due to 'excess towing'.
27. The Applicant was surprised by this. The car had towed his lightweight aluminium runabout on one occasion only for a duration of about 30 km. This was a round trip from his home at Warrawee to Bobbin Head and back.
28. On 3 August 2020 the Applicant sent an email to Jackson Spanjaard of the Second Respondent advising him that he would be lodging a complaint with NSW Fair Trading and requesting a quote to repair the clutch assembly. By return, the Applicant received from the Second Respondent an email advising that the cost of replacing the clutch plate assembly was $6,028 (AB7).
29. On 4 August 2020 Jackson Spanjaard of the Second Respondent sent an email to the Applicant which he said the issue with the clutch plate was due to "wear and tear" (AB5‑6) which was not covered under the warranty.
30. On 17 August 2020 the Applicant instructed the Second Respondent to proceed with the replacement of the clutch plate.
31. It appears from about 28 July 2020 until 24 September 2020 the Second Respondent had the vehicle at its service centre for diagnosis and for the clutch replacement. On or about 24 September 2020 the Second Respondent returned the vehicle to the Applicant with a tax invoice #SZCR700206 dated 24 September 2020 in the sum of $6,028 (AB39-40). Relevantly, the narrative of repair work done is stated in the tax invoice as follows: "Job #1 06SZZZZZZ001 Diagnose Tech(s): 645 695. Check between first and second there is a thumping feeling which eventually turns into a shudder. Road test, confirm shudder 1st to second gear. Checked and confirmed trans and actuator oil level correct. Carry out adaptive learn. Found to be still shuddering. Remove gearbox, inspect odd gear and clutch assembly. Found to be okay. Remove even gear clutch assembly, found to be at wear limit, 4.5 mm. Remove and replace clutch head and thrust bearing, carry out measurements and alignment. Carry out accumulator re‑learn. Carry out clutch learn, road tested. All okay."
32. Within 2 weeks of collecting the vehicle from the Second Respondent on 24 September 2020, the Applicant observed three things. First, the transmission issue remained present, although it was not as prominent as before. Secondly, the automatic gearbox was "slipping" when changing gears. The vehicle was revving high when it was attempting to change gears. This was also occurring intermittently. Thirdly, at the same time as the gearbox was slipping, the transmission warning light would activate or illuminate on the dashboard.
33. The last two of these issues were new issues insofar as the Applicant had not discerned them as part of the transmission issue in the vehicle prior to 28 July 2020.
34. In October 2020 the Applicant engaged an expert mechanic, David Marston, to inspect the vehicle and the transmission components replaced by the Second Respondent which were provided to the Applicant by the Second Respondent on 24 September 2020 in relation to the transmission issue.
35. On 26 November 2020 the Applicant sent an email regarding these three matters to the Second Respondent stating that the transmission issue had not gone away, that the transmission/gearbox regularly slips or flares on gear change and that this had only commenced after 24 September 2020. In addition, the Applicant documented 11 times when as a result of slippage/flaring of the transmission, the transmission warning light on the instrument panel lit up and continued to remain illuminated until the ignition was turned off for a period of time (AB137).
36. On 22 November 2020 the Applicant was travelling out to his farm near Lithgow at a highway speed of approximately 100 km/h but the gearbox would not shift above fourth gear.
37. On 3 December 2020 the Applicant documented that the transmission of the vehicle "completely locked up in peak hour on the Pacific Highway at Pymble with transmission warning lights flashing with a new dashboard sign … it is not safe to drive" (AB138‑139).
38. On 8 December 2020 the Applicant arranged for the vehicle to be towed to the Second Respondent to again inspect the transmission issue and two further problems outlined above at a cost of $143. By early January 2021 the Applicant had not heard anything further from the Second Respondent but received an email dated 6 January 2021 in response stating, amongst other things: "On removal of your gearbox we found the adjustment rod for the clutch was slightly out by roughly 2.5 mm (from memory). I have asked our Suzuki district manager to come out while we adjust the rod so he can tick it off that it has been adjusted correctly." (AB140)
39. The vehicle was returned to the Applicant by the Second Respondent on 14 January 2021. The Second Respondent communicated to the Applicant that the vehicle was fixed but did not provide any paperwork for the work performed between 8 December 2020 and 14 January 2021, nor did the Second Respondent invoice the Applicant for work to the vehicle.
40. The Applicant drove the vehicle for a few days but continued to notice that the gearbox was slipping or revving high when attempting to change gears and that the transmission warning light would activate or illuminate on the dashboard at that time.
41. In an email dated 25 January 2021 to Daniel Rose at the Second Respondent, the Applicant stated: "Unfortunately the transmission problem with my Suzuki Vitara has not gone away. Last Friday there was a large transmission slippage when changing down from sixth gear to fifth gear on an uphill section of the Great Western Highway just west of the M4 motorway at Penrith … there have been two other incidences of minor slippage (without transmission warning light illumination) since I picked up the vehicle from you on 14 January 2021. What do you want me to do?" (AB142)
42. Further incidents arising with the transmission of the vehicle at this time are outlined in paragraph 71‑80 of the Applicant's statement.
43. On 22 March 2021 the Applicant emailed the Second Respondent (AB147) about a further incident with the transmission warning light illuminating on the dashboard. The Applicant said: "I feel I have been extremely patient whilst Suzuki and yourself have endeavoured to resolve the ongoing transmission issue. This problem first arose nearly two years ago at a time when the vehicle was less than 2 years old and had travelled no more than 55,000 km. I've not had the use of the vehicle for the majority of that two year period. The vehicle is obviously a 'lemon' I am aware of my Australian Consumer Law rights to reject the vehicle as containing a major fault (thus being unroadworthy) and claim a refund of the original price paid ($35,700.00). Suzuki's argument that the transmission issue is normal 'wear and tear' is laughable. I have already outlaid over $6,000 in repair costs plus another $3,000 to obtain an expert's report on the cause of the transmission problem ... Suzuki has a copy of that report but has chosen to ignore its content. Can you please respond to this email advising what course both you and Suzuki now intend to take."
44. By 3 April 2021 the Applicant emailed the Second Respondent stating further incidents of the warning transmission light coming on and stated: "I'm not able to use the vehicle in its current condition. It is unsafe to do so. I am also unable to dispose of it because of the long list of transmission problems commencing when the vehicle was no more than 2 years of age having travelled approximately 55,000 km." (AB148)
45. The vehicle returned to the Second Respondent on or about 8 April 2021 to again inspect and rectify the ongoing and unresolved transmission issue. The Second Respondent had the vehicle from the period 8 April 2021 to 11 May 2021. On or about 11 May 2021 the Applicant collected the vehicle from the Second Respondent and was apparently told the issue had been fixed.
46. At this point the Applicant states that he decided that he had no option other than to sell the vehicle. However he was not prepared to dispose of the vehicle privately as he did not wish to sell the vehicle which had serious issues with its operation to another person which, separately, may have left him open to a claim by the purchaser.
47. After consulting a friend in the motor industry, the Applicant resolved the only option was to dispose of the vehicle by a wholesale public auction where no warranty is required to be provided. He did so. The Applicant gave evidence from a contact at NSW Auto Traders at Croydon that the wholesale price of the vehicle realised was nett $16,000 and that the current retail sale price of the vehicle had it been in proper working condition would have been about $22,000-$25,000.00 (AB156).

Claim for loss and damage

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

1. 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

1. 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

1. Suzuki Australia Pty Ltd submitted a 2 page letter/report dated 30 July 2021 in respect of the vehicle.
2. 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.
3. The First Respondent adduced no independent expert evidence in response to the Applicant's claim.

The Second Respondent's evidence

1. 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.
2. 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

1. 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.
2. 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

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.
7. Neither of these responses of the Second Respondent were factual or transparent based upon the evidence before the Tribunal.
8. 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.
9. 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.
10. 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.
11. 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.
12. 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.
13. 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).
14. 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.
15. 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.
16. 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.
17. 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.
18. 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"
19. 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.
20. 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.
21. 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.
22. 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.
23. 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.
24. 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.
25. 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.
26. 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).
27. 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 .
28. 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

1. The Tribunal orders the First Respondent to pay the Applicant the sum of $10,668.00 within 28 days.
2. 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