Solid Az Concrete Pty Ltd v Stellantis

NCAT Consumer and Commercial|2023-11-24

Background

This dispute arises out of the purchase from the second respondent Autonation Pty Ltd t/as Central Coast Chrysler Jeep Dodge (CCCJD) of a 2020 Jeep; Wrangler Unlimited Rubicon or ("the vehicle") imported by the first respondent Stellantis (Australia and New Zealand) Pty Limited (Stellantis).
A preliminary issue arose after the hearing when the Tribunal detected that the applicant named as Brendan James Lane trading as Solid Az Concrete was not the named purchaser on the sales invoice (Solid Az Concrete Pty Ltd). The Tribunal called for submissions. The applicant confirmed that the purchaser of the vehicle was the company. The respondent did not make any submissions in response. The Tribunal is satisfied that it is consistent with the Tribunal's guiding principle to amend the name of the applicant to Solid Az Concrete Pty Ltd ("Solid Az Concrete") and makes an order accordingly.
Solid Az Concrete alleges that: 1. the vehicle is not of acceptable quality and is not fit for purpose, representing a breach of s 54 of the Australian Consumer Law (ACL) and 2. whilst the vehicle has been repaired, the applicant can have no faith in the vehicle because of the number of times it has required repairs, and the circumstances in which it has broken down, and
Brendan James Lane is the director of Solid Az Concrete. He says that he would not have purchased the vehicle if he had been acquainted with its propensity to break down. He submits that the failure to comply with the consumer guarantee is a major failure because a reasonable consumer would not have purchased the vehicle, knowing that it would be off the road for repairs for the length of time which the vehicle has been (41 weeks).
Solid Az Concrete began negotiations with Stellantis in respect of a "buy back". On 15 May 2023 Mr Lane advised Stellantis that the applicant was exercising its rights under the ACL to reject the vehicle. He did not provide a notice of rejection to CCCJD and he has not returned the vehicle.

Jurisdiction

The Tribunal has jurisdiction to resolve consumer claims, defined by the Fair Trading Act, 1987 (FTA) (s79E) as: a claim by a consumer, for one or more of the following remedies, that arises from a supply of goods or services by a supplier to the consumer (whether or not under a contract) or that arises under a contract that is collateral to a contract for the supply of goods or services-- (a) the payment of a specified sum of money, (b) the supply of specified services, (c) relief from payment of a specified sum of money, (d) the delivery, return or replacement of specified goods or goods of a specified description. (2) For the avoidance of doubt, a reference in this Part to a consumer claim includes a reference to a claim by a consumer against a supplier (for example, a manufacturer or wholesaler) who is not the direct supplier of goods or services to the consumer if the claim arises from or in connection with the supply of those goods or services by the direct supplier to the consumer.
I am satisfied that CCCJD is in the business of supplying new and used cars, and that Stellantis as the importer of the vehicle is deemed to be the manufacturer of the vehicle for the purpose of the FTA. On or about 1 September 2020 CCCJD supplied the vehicle to Solid Az Concrete in the course of CCCJD's business.
An issue arises as to whether Solid Az Concrete is a consumer as defined in the Australian Consumer Law (ACL), and whether the ACL applies, in circumstances where the purchase price exceeded $40,000, because s 3 of the ACL provides: Acquiring goods as a consumer (1) A person is taken to have acquired particular goods as a consumer if, and only if: (a) the amount paid or payable for the goods, as worked out under subsections (4) to (9), did not exceed: (i) $40,000; or (ii) if a greater amount is prescribed for the purposes of this paragraph--that greater amount; or (b) the goods were of a kind ordinarily acquired for personal, domestic or household use or consumption; or (c) the goods consisted of a vehicle or trailer acquired for use principally in the transport of goods on public roads.
The sum of $40,000 was increased to $100,000 by the Treasury Laws Amendment (Acquisition as Consumer - Financial Thresholds) Regulations 2020 (Cth). Schedule 1 of the amending instrument inserted the prescribed amount of $100,000 for the purposes of s 3(1)(a) of the Australian Consumer Law. Clause 2 of the amending instrument lists the 1 July 2021 as the date of commencement. The Regulation now provides: 77A Prescribed amount - acquiring goods or services as a consumer For the purposes of paragraph 3(1)(a) of the Australian Consumer Law, the amount of $100,000 is prescribed.
The vehicle was acquired in September 2020, at the time when the increase had not taken effect. The purchase price exceeded $40,000. In order for the ACL to apply, I must determine objectively whether goods of this kind (the vehicle) are ordinarily acquired for personal, domestic or household use.
It is clear from the evidence that Solid Az Concrete used the vehicle for both business and personal purposes. However, the definition requires an objective determination of the purpose for which goods of this kind are acquired, rather than a subjective determination of Solid Az Concrete's purpose in acquiring the goods. This issue was discussed in Safi v Heartland Motors Pty Ltd t/as Heartland Chrysler [2016] NSWCATAP 80, a case concerning a Jeep Cherokee motor vehicle [paras 62-65]: "The purchase price" of the Jeep Cherokee Trailhawk was well in excess of $40,000. The question therefore arises as to whether the Jeep Cherokee Trailhawk motor vehicle can be described as goods that were "of a kind ordinarily acquired for personal, domestic or household use or consumption". This issue was considered by Young J, as he then was, in Bunnings Group Limited (formerly Bunnings Pty Ltd) v Laminex Group Limited [2006] FCA 682 in construing the meaning and application of the phrase in the context of the Trade Practices Act 1974 (Cth) (TPA). The TPA was significantly amended by Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010 (Cth) to incorporate the new Australian Consumer Law into Schedule 2 and to rename the Act as 'the Competition and Consumer Act 2010 (Cth)'. The Bunnings case and observations of Young J is authoritative because the legislative provisions considered by his Honour are in the same terms as the current provisions relating to consumer guarantees and consumer claims against manufacturers and importers (see also cl 26, Chapter 2 of the Explanatory Memorandum to the Bill). His Honour made the following observations, after considering cases where analogous expressions were used: (1) The word 'ordinarily' means 'commonly' or 'regularly' not 'principally', 'exclusively' or 'predominantly' at [81]; (2) It is preferable to pose the statutory question as a composite question rather than as a two stage inquiry as to the genus of the goods then whether that kind of goods is ordinarily acquired for personal, domestic or household use or consumption at [82]; (3) Depending on the precise statutory question and the circumstances of the particular case, it will be relevant to inquire into the essential character of the goods in question, which should be determined objectively, but also having regard to a broader inquiry into the evidence concerning the design, marketing, pricing and potential uses of the type of goods in question at [83 −86]; (4) The question is ultimately a question of fact and degree at [87]; and (5) The language of the TPA, which focuses on what goods of a kind are ordinarily acquired for, not ordinarily used for, invites attention to "design features and purposes, cost quality and pricing considerations, and the range of uses and applications for the goods that have been targeted in advertising and promotional material" at [107]. However, it would be a mistake to become too focused on these questions so as to identify the kind of goods "so narrowly that it amounted to little more than a description of particular goods" at [108]. Having regard to these observations, we are satisfied that the Jeep Cherokee Trailhawk vehicle is a good of a kind "ordinarily acquired for personal, domestic or household use or consumption". While the Jeep Cherokee Trailhawk vehicle may be used, and in this case was in fact used and acquired, for the purpose of business use, this is not the inquiry directed by s 3(1)(b) of the ACL (NSW). While this issue was not the subject of discussion or evidence before the Tribunal at first instance, it is clear from the material provided that the Jeep Cherokee Trailhawk is a vehicle that is ordinarily acquired for personal use. There is nothing to suggest that such a vehicle is ordinarily acquired for commercial or business purposes, such as, for instance, a truck or a table top utility. It therefore does not matter that Mr and Mrs Safi acquired it for the purposes of their business and, presumably, also personal use.
Following that same reasoning, I am satisfied that the vehicle the subject of these proceedings is of a kind ordinarily acquired for domestic or personal use. Solid Az Concrete is a consumer, the claim is a consumer claim, and the ACL applies. The claim is brought within time and the Tribunal has jurisdiction to determine it.

Issues

A number of issues arise for determination: 1. Is the vehicle of acceptable quality as defined in s 54 of the Australian Consumer Law (the ACL)? 2. If not, has there been a major failure to comply with the guarantee? 3. Has Solid Az Concrete rejected the vehicle? Has the rejection period expired? What is the effect of the fact that the vehicle has not been returned to the supplier? 4. What remedy is Solid Az Concrete entitled to? If it was entitled to reject the vehicle and is entitled to a refund of the purchase price, is it also entitled to compensation for the cost of the accessories?

The facts

Where a party wishes to rely upon opinion evidence, an expert witness may be called. Neither party has provided any expert evidence.
On the basis of the available evidence, I find on the balance of probabilities that: 1. On 1 September 2020 Solid Az Concrete purchased the vehicle from CCCJD for a price of $76,704.00. 2. On 16 September 2020 the vehicle was collected from the dealership. 3. On 8 November 2020 the engine light came on during 4x4. 4. On 10 November 2020 the vehicle was taken to the dealer for diagnosis of the issue. The dealership could not reproduce the fault (see CCCSC43418). 40 minutes after leaving the dealership, the fault returned, and the vehicle was delivered back to the dealership. 5. On 18 November 2020 the vehicle was returned to the applicant. 6. In March 2021 the engine light came on, the Stop/ Start was not functioning and codes relating to the DPF system were displayed. 7. On 29 March 2021 the vehicle was returned to the dealer for diagnosis. The dealer concluded that the DPF needed replacement and ordered the part (see CCCSC45887). 8. On 30 March 2021 the vehicle was returned to the applicant. 9. On 1 June 2021 the DPF pressure sensor was replaced, and the stop/start battery was replaced. The dealer identified that the vehicle "possibly needs new DPF and alternator - will need further diagnosis when brought back for oil filter" (see CCCSC47149). 10. On 10 June 2021 the oil filter was replaced, and the dealer confirmed that the DPF required replacement (see CCCSC47359). 11. On 7 July 2021 the battery was changed, an internal electrical fault was detected in the DPF pressure sensor, and it was replaced (see CCCSC46854). 12. On 14 December 2021 the DPF was replaced. The service record states that the DPF and the sensor had both failed and both were replaced (see CCCSC50388). 13. On 16 December 2021 the vehicle was returned to the applicant. 14. On 8 April 2022 the 40,000km service was carried out (JEYSM378861). 15. On 14 December 2022 the engine light came on, and the car went into limp mode. The applicant found a code for turbo underboost. The turbo was replaced (see JBCSG638401). 16. On 8 February 2023 the vehicle was returned to the applicant. It was noticed that the automatic stop/ start was not working almost immediately. The applicant called the dealer and booked the vehicle back in for 20 February 2023. 17. On 16 February 2023 the engine light came on, and the car went into limp mode. Mrs Lane spent 4 hours on the side of the road waiting for a tow truck with son Cruz who was in a wheelchair. They were told he could go in the tow truck, then told he couldn't. He was picked up by family. The dealer detected a nut loose on the impellor shaft causing the turbo to fail. The turbo was replaced for the second time (see JBCSG643068). 18. On 21 April 2023 the car was to be returned but engine codes were detected. The DPF was replaced again. The service sheet states that the DPF had been soaked with oil when the turbo failed (see JBCSG643068 job 4). 19. On 23 June 2023 the vehicle was returned to the applicant. 20. On 5 July 2023 the engine light came on again, and the car went into limp mode. There was a code relating to the turbo/supercharge. The dealership could not fault it, but the jeep rep said it was surging. 21. On 27 July 2023 the idrive (an accessory which had been fitted after purchase) was removed and the applicant picked the car up. On 29 July 2023 it again went into limp mode and was towed back to the dealership. The batteries were disconnected and reconnected and the vehicle returned to the applicant (see JBCSG654630). 22. On 29 July 2023 the car wouldn't start. The applicant notified Stellantis. 23. On 2 August 2023 the vehicle was collected on a tow truck and taken back to the dealer. The starter motor was replaced. 24. On 11 August 2023 the vehicle was returned to the applicant. On the way home the engine light came on and the car went into limp mode. The codes related to turbo and superboost control. 25. On 18 August 2023 the vehicle was collected from the applicant on a tow truck. On 27 September 2023 the catalytic convertor was replaced. The turbo was replaced again. 26. On 17 October 2023 the vehicle was returned to the applicant. 27. The applicant has no faith in the vehicle and is scared to drive it. 28. Solid Az Concrete says that it spent $28,297.92 on accessories and had them fitted to the vehicle, but the evidence does not disclose precisely when those accessories were fitted. No invoices nor any supporting evidence of the cost has been provided.

Is the vehicle of acceptable quality as defined in s 54 of the Australian Consumer Law (the ACL)?

Section 54 of the ACL provides: 54 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.
The evidence shows that the vehicle has been plagued with issues since its purchase, with the first issue arising only 6 weeks after the vehicle was delivered. The consumer has constantly returned the vehicle to authorised dealers for diagnosis and repair, but the vehicle continues to break down. Whilst there is no expert evidence before me, I am satisfied that the vehicle was not free from defects when it was supplied, as the first issue presented itself when the vehicle was only 6 weeks old. Whilst a reasonable consumer might regard the vehicle as being of acceptable quality if the fault could be rectified, and if it did not recur, that has not been the case. Taking into account the price paid for the vehicle, I am satisfied that a reasonable consumer, fully acquainted with the unreliability of this vehicle, would not regard it as being of acceptable quality.

Did the applicant cause the vehicle to become of unacceptable quality?

Stellantis submitted that the accessories fitted by the applicant may have caused or contributed to the issues with the vehicle, such that the applicant caused the goods to become of unacceptable quality. However, there is no expert evidence before me to support that submission. Indeed, if there was any risk that that was the case, a reasonable consumer would expect that the dealers servicing the vehicle would have insisted at an early time that the offending accessories be removed. Indeed, the idrive was removed in July 2023 (and presumably could have been removed much earlier). There is no expert evidence to support a finding that it had caused or contributed to the issues and indeed the issues continued after it was removed.
I am not satisfied that Stellantis has proven that the applicant caused the vehicle to become of unacceptable quality.

Has there been a major failure to comply with the guarantee?

A failure to comply with a consumer guarantee will be a major failure if (s 260 ACL): (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.
I am satisfied that a reasonable consumer would not have acquired this vehicle if fully acquainted with its propensity to break down. By the time it was returned to the applicant in October 2023, the applicant had been without the vehicle for some 41 weeks whilst it underwent repairs. This in itself means that the vehicle is substantially unfit for the use for which it was supplied. It is also evidence that the issues with the vehicle were not remedied easily and within a reasonable time. I am also satisfied that the propensity of the vehicle to go into limp mode, sometimes whilst being driven on highways, made it unsafe.
For all these reasons I am satisfied that the failure to comply with the guarantees is a major failure.

What remedies is the applicant entitled to?

The ACL provides a series of remedies where there is a failure to comply with a consumer guarantee. Where the failure can be remedied, the consumer may require the supplier to remedy the failure within a reasonable time (s259 (1)). If the supplier refuses to do so, the consumer may otherwise have the failure remedied and may recover the cost from the supplier, or the consumer may reject the goods and is entitled to a refund of the purchase price. Additionally, if the failure cannot be remedied or is a major failure and so long as the rejection period had not ended at the time of the rejection, the consumer may reject the goods and return them to the supplier (or in some circumstances require the supplier to collect the goods). The consumer may also seek compensation for any other reasonably foreseeable loss.
The consumer also has a remedy against the manufacturer under ss 271 and 272 of the ACL. The consumer may seek that the manufacturer remedy the failure to comply with the guarantee [s 271 (6)] or may seek damages under s 272 for any reduction in the value of the goods below the lower of the price paid for the goods and the average retail price of the goods at the time of supply, together with any reasonably foreseeable loss or damage suffered as a result of the failure to comply with the guarantee. If the failure has been remedied, the consumer is precluded from seeking damages for any reduction in value of the goods but may seek damages for any other reasonably foreseeable loss.
Under ss 271 and 272, the loss for which the consumer is entitled to be compensated must flow from the failure of the goods to comply with the consumer guarantees which have been breached.

Has the failure to comply with the guarantee been remedied?

The manufacturer submits the vehicle has now been repaired and accordingly submits that the failure to comply with the consumer guarantees has been remedied. The applicant says that he has no confidence that the vehicle will not continue to have issues and will not continue to break down and disputes that the failure has been remedied.
There is no expert evidence which might have assisted the Tribunal to resolve this issue. However, the history of this vehicle suggests that repairs have not in the past prevented the vehicle from breaking down. The evidence of repeat replacements (of the DPF and the turbo) supports a finding that the vehicle continues to be of unacceptable quality.
I am not satisfied on the evidence that the failure to comply with the guarantee has been remedied. I am also not satisfied that it can in a reasonable time be remedied.

Remedies against the supplier

Section 259 (3) of the ACL relevantly provides: (3) If the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may: (a) subject to section 262, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection; or (b) by action against the supplier, recover compensation for any reduction in the value of the goods below the price paid or payable by the consumer for the goods. (4) The consumer may, by action against the supplier, recover damages for any loss or damage suffered by the consumer because of the failure to comply with the guarantee if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure.
The applicant has not complied with s 259(3) and has not notified the supplier that it rejects the goods. The notification of the rejection of the goods was given to Stellantis and not to CCCJD. Indeed, even when the proceedings were commenced, they were commenced against Stellantis. CCCJD was added as a respondent by the Tribunal, but the rejection of the vehicle has never been directed to CCCJD.
Stellantis submits that the rejection has not been effective because the vehicle has not been returned to CCCJD. I am not satisfied that the failure to return the vehicle means that the rejection is ineffective. Return of the vehicle (or collection by the supplier) is a consequence of the effective rejection of the goods (see s 263). The problem is that the applicant has not notified the supplier of the rejection of the vehicle, and in these circumstances, the right to a refund of the price under s 263 (4) (a) does not arise. The application for this order must be dismissed.
The applicant can maintain a claim for compensation under s 259(3) for any reduction in the value of the goods below the price paid or payable for the goods, or under s 259 (4) for damages for any loss or damage suffered because of the failure to comply with the guarantee so long as it was reasonably foreseeable that the applicant would suffer such loss or damage as a result of such a failure. The applicant has not brought such claims and there is no evidence before the Tribunal which would support either of them.

Remedies against the manufacturer

The right to reject the vehicle and have the purchase price refunded is not a remedy available against the manufacturer. As stated above, the consumer's rights against the manufacturer include the right to seek that the manufacturer remedy the failure to comply with the guarantee [s 271 (6)] or to seek damages under s 272 for any reduction in the value of the goods below the lower of the price paid for the goods and the average retail price of the goods at the time of supply, together with any reasonably foreseeable loss or damage suffered as a result of the failure to comply with the guarantee. If the failure has been remedied, the consumer is precluded from seeking damages for any reduction in value of the goods but may seek damages for any other reasonably foreseeable loss.
The applicant has not provided any evidence which would enable the Tribunal to determine whether there has been a reduction in the value of the goods below the lower of the price paid for the goods and the average retail price of the goods at the time of supply. There is also no evidence to support a claim for compensation for any other foreseeable loss.

Is the cost of the accessories a reasonably foreseeable loss for which the applicant is entitled to compensation?

I am satisfied that, had the applicant given the appropriate notice to the supplier, he would have been entitled to an order for the refund of the purchase price. It would have been necessary for the vehicle to be returned to the supplier or collected by the supplier if it could not have been returned or transported without significant cost because of the nature of the failure to comply with the guarantee. I cannot determine whether the applicant still has the right to reject the vehicle, (if he were now to give the appropriate rejection notice) because I do not have evidence of what use (if any) the vehicle has been put to since it was returned to the applicant, and I cannot determine whether the rejection period has now ended.
I note that this matter would have been resolved between the parties, except for the issue as to the accessories which had been added to the vehicle. The applicant sought compensation for them, whilst the manufacturer required that they be removed prior to the return of the vehicle.
The question is whether the cost of the accessories is a loss which was reasonably foreseeable and thus claimable under either s 259 (4) or s 271 and 272. I am satisfied that it is. It is reasonably foreseeable that a consumer may add accessories to a vehicle, and especially a vehicle designed to be used off road. It is also foreseeable that if the vehicle is rejected under the ACL and returned to the supplier, these costs (or at least some of them) will be lost. Thus I am satisfied that compensation for at least some of those costs will be a foreseeable loss for which compensation will be claimable under the ACL.
The issue does not arise in these proceedings because the loss does not stand as a loss unless the vehicle is rejected and returned to the supplier. However, I have included my analysis of it to assist the parties, in the event either that this decision is appealed, or that a rejection notice is given to the supplier in the future.

Orders 1. The name of the applicant is amended to Solid Az Concrete Pty Ltd. 2. The application is dismissed.

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: 31 October 2024

Australian Consumer Law Treasury Laws Amendment (Acquisition as Consumer - Financial Thresholds) Regulations 2020(Cth)

Treasury Laws Amendment (Acquisition as Consumer - Financial Thresholds) Regulations 2020(Cth)

Trade Practices Act 1974(Cth)

At a glance

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Judgment (14 paragraphs)

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