These proceedings arise out of the purchase by the Applicant of a second hand Hyundai Imax motor vehicle on 7 February 2015. The Applicant alleges that the vehicle was not of acceptable quality and was not fit for purpose in breach of the guarantees arising pursuant to ss54 and 55 of the Australian Consumer Law (ACL). The application was filed on 25 November 2015.
It is common ground between the parties that no warranty arising under the Motor Dealers and Repairers Act 2013 (NSW) was applicable to the sale of the vehicle.
The Applicant appeared in person. The First Respondent, Valley Motor Auctions Pty Ltd (Valley Motors), which sold the motor vehicle to the Applicant, was represented by Mr Helliar, the sales representative of Valley Motors. The Second Respondent, New Model Wreckers Pty Ltd (New Model Wreckers), which had supplied a replacement engine for the vehicle in circumstances which I will discuss below, was represented by Mr Balkejian, its General Manager.
The Applicant tendered two folders of evidence which became Exhibit A and Exhibit B. Exhibit B included statutory declarations by the Applicant and her daughter-in-law, Ms Kylie Henderson. Mr Helliar objected to the Tribunal receiving the statutory declarations as they had not been filed or served in accordance with the directions of the Tribunal. They had in fact only been filed the day before the hearing and had not been served on either Respondent.
The Applicant submitted that the statutory declarations were in reply to evidence filed by the Respondent. This was not correct. The evidence was clearly evidence in chief in support of the Applicant's case. However as the Applicant's statutory declaration consisted entirely (or almost entirely) of evidence already set out in other material filed by the Applicant (including her original Application), I received the Applicant's statutory declaration into evidence.
Ms Henderson's statutory declaration contained many paragraphs which were merely hearsay assertions of what others had done or believed, or were simply argumentative.
I did not receive those paragraphs into evidence but allowed paragraphs 1 to 8 and 18 and 19 which recorded Ms Henderson's version of conversations and events which were already the subject of material filed by the Applicant and to which Valley Motors had responded.
The Respondents each tendered a bundle of documents. Valley Motors' bundle of documents became Exhibit 1. Exhibit 1 included statutory declarations from:
Mr Robert Arthur, a senior sales representative and auctioneer with Valley Motors,
Ms Ashlee Cooper, an employee in the administration department at Valley Motors,
Mr Mile Predojevic, workshop manager for Valley Motors,
Mr Helliar, the sales representative who represented Valley Motors at the hearing,
Mr Graham Gamer, the Managing Director of Valley Motors,
Mr David McLeay, a qualified mechanic and the owner and operator of Argenton Automotive Repairs,
Mr Brad Armstrong, a licensed mechanic employed at Argenton Automotive Repairs,
Mr Stephen Gamer, the Chief Executive Officer of Valley Motors,
Mr Stephen Prouse, a licensed mechanic working for Valley Motors.
Each of the Applicant, Ms Henderson, Mr Helliar, Mr Balkejian and Mr Arthur gave oral evidence and were asked questions by the Tribunal and by either the Applicant or Mr Helliar as appropriate. Mr Balkejian was given the opportunity to ask questions of the Applicant and Ms Henderson but did not do so.
Certain facts are not in dispute and I make findings as follows:
1. The Applicant attended the premises of Valley Motors on 17 February 2015 having identified the Hyundai Imax vehicle on Valley Motors' website as one she was interested in.
2. The Applicant was accompanied by her son and her daughter-in-law (Ms Henderson).
3. The Applicant spoke to Mr Arthur.
4. The Applicant told Mr Arthur she was looking for a vehicle to use in her business which involved providing passenger transport, particularly on winery tours and airport shuttles from the Newcastle region.
5. The Applicant inspected the Imax vehicle in the company of Mr Arthur.
6. The vehicle was first registered in 2010 and had 272,732 kilometres on the odometer.
7. The Applicant and Mr Arthur engaged in discussions concerning the vehicle. The Applicant indicated she would pay $13,000 for the vehicle. Mr Arthur indicated to the Applicant that that price would be acceptable to Valley Motors.
8. There is an issue between the parties as to whether or not the vehicle was sold to the Applicant at auction. I will address that issue later.
9. Before leaving the premises of Valley Motors on 17 February 2015 the Applicant signed a document which was headed "Registration and Absentee Bidder's Form". The form identified the vehicle, a Price of $11,900 and "Fees" being an administration fee of $880 and a buyer's premium of $220.
10. The Registration and Absentee Bidder's Form stated:
1. "I appoint Valley Motor Auctions Pty Ltd, or its nominee, as my agent to bid at auction for the motor vehicle and I agree to be bound by the terms and conditions as set out on the reverse of this form.
2. This appointment will be for the Term and is irrevocable until expiration of the Term. [The Term was defined as 7 days].
3. I acknowledge that I am the principal and will be liable for payment of the purchase price for the Motor Vehicle and any other payments due and payable under this document.
4. I acknowledge that if Valley Motor Auctions Pty Ltd, as my agent pursuant to this form, is the successful bidder at the auction, then I will be bound to purchase the motor vehicle for the price.
5. I agree to pay Valley Motor Auctions Pty Ltd the Fees.
6. Valley Motor Auctions Pty Ltd is authorised to bid no more than the Price for the motor vehicle."
1. The document also recorded that the Applicant was to acquire a 12 month extended warranty for a fee of $300 and noted "I understand that warranty products are supplied by a third party supplier and any such warranty claims must be made directly with the third party supplier as stated in the Warranty Booklet."
2. A paragraph in bold at the bottom of the page, identified as Part 3 of the document, was as follows:
"(a) My bid on this absentee bid form is NOT a guarantee that I will own the above vehicle.
(b) Valley Motor Auctions will auction the above vehicle and will submit this bid on my behalf at the said auction.
(c) If this bid is successful at that auction, then and only then will I receive title and be liable to pay for the vehicle and take delivery of the above vehicle.
I acknowledge that I will not own the "Motor Vehicle" unless my bid is successful at auction and that I have received a copy of this irrevocable Absentee Bid Form Section 1(b) with the exception of absentee bids completed by telephone."
1. Next to that paragraph appeared the initials of the Applicant beneath the words "initial of bidder" and above the words "I have read and understood Part 3".
2. On the back of the Registration and Absentee Bidder's Form there appeared terms and conditions headed "Terms and Conditions of Sale by Public Auction" consisting of 20 numbered paragraphs with sub-paragraphs.
3. Paragraph 5 provided:
"5. The Auctioneer may, without reason and at its sole discretion refuse to accept any Bid, withdraw any Lot at any time, vary the order in which Lots catalogued are to be auctioned or make any alteration to these Terms before the completion of the sale."
1. Clause 6 permitted the auctioneer to determine increments in bidding, stated that "No bidder may retract any Bid" and reserved the right to bid on behalf of the vendor.
2. Clause 7 provided:
"Subject to any reserve, the highest Bidder shall be the Purchaser upon the fall of the hammer. In the event of any dispute the purchaser shall be determined by the Auctioneer in such manner as the Auctioneer in its sole discretion thinks fit and in the event that any lot is not sold the Auctioneer may sell the lot at the auction or as soon as practicable thereafter by private treaty under the Terms and Conditions here expressed."
1. Clause 9.1 was as follows:
"To the fullest extent permitted by law or all lots are available for inspection before the sale and it is deemed that the goods have been inspected by the purchaser. All lots are sold in their current state of repair and condition at the time of the auction or sale with all defects and faults latent, patent or otherwise (if any). No error or mis-description shall invalidate the sale and the Purchaser shall be bound to take delivery of the goods sold without allowance or lessening in price. Any deficiency in the quality described shall not invalidate the sale and neither the Auctioneer nor the Vendor shall be bound to deliver more than is in his possession. All lots are to be bid for, purchased and taken as they now stand and in their present position and condition."
1. Clause 9.3 provided:
"To the fullest extent permitted by law or the Auctioneer and the Vendor make no warranties and give no guarantees as to the condition, suitability, fitness for purpose or merchantable quality of any goods and the Purchaser expressly acknowledges that: …
(b) S54, s55 and s56 of the Australian Consumer Law excludes the implied undertakings as to acceptable quality, fitness or disclosed purpose and the guarantee relating to the supply of goods by description in the case of sales by auction.
…
(d) Any warranties, guarantees or conditions as to quality or fitness for purpose implied by the common law or provided by statute are hereby expressly excluded. In addition no warranty or guarantee shall be implied from any statement or affirmation made at or before the time of the sale or otherwise.
1. Clause 10.1 provided:
"Without any way limiting 9.1, 9.2 and 9.3 and subject to;
(a) conditions and warranties prescribed by statute which cannot be excluded ("prescribed terms") the liability of the Auctioneer and Vendor for a breach of prescribed terms is limited at the option of the Auctioneer or Vendor to the replacement, equivalent supply or repair of the Lot supplied or the cost of any of these items."
1. Clause 18 provided that the Agreement was governed by the law of New South Wales.
2. The Applicant obtained finance for the vehicle from Speedy Finance. That finance was approved on 17 February 2015. A tax invoice was issued to Speedy Finance on 17 February 2015 and the purchase price of the vehicle was paid by Speedy Finance on 18 February 2015. The Applicant borrowed an additional $5,000 from Speedy Finance making a total loan of $18,300. Speedy Finance charged an establishment fee of $4,000 and fixed an annual percentage interest rate for the loan of 59%.
3. On 21 February 2015 the Applicant took delivery of the vehicle. On that occasion she signed a document headed "Delivery Agreement" which stated:
"I Christine Solomons of XXX acknowledge and agree that:
1. I have carefully inspected the Vehicle and acknowledge the vehicle was purchased by me at Auction.
2. I am satisfied that the Vehicle's description and any information received by me from Valley Motor Auctions, is accurate.
3. I am fully satisfied with the appearance and condition of the Vehicle.
4. I hereby indemnify Valley Motor Auctions against any claim by me whatsoever in relation to this vehicle in the future and I understand there is no warranty given or implied.
5. I understand that roadworthy certificates issued in New South Wales may not comply with other State's requirements for re-registration purposes.
6. I understand that this vehicle was purchased by way of absentee bid at public auction.
1. About a week after 21 February 2015 the Applicant communicated initially by telephone and then by attendance at the premises of Valley Motors complaining of a noise and oil leaks in the vehicle. On that occasion the Applicant was provided with a loan vehicle while Valley Motor Auctions assessed the vehicle. The following day the Applicant collected her vehicle.
2. The Applicant then utilised the vehicle in her business. The vehicle broke down on 22 March 2015 at Lindfield. The vehicle was towed back to Valley Motors.
3. On 26 March 2015 the Applicant was provided with a loan vehicle being a Kia Carnival. The Applicant complains that that vehicle was in very poor condition with a most unpleasant smell inside which she was unable to overcome. The Applicant asserts that she was unable to and did not use that vehicle in her business unless it was absolutely necessary.
4. The Applicant was advised by the mechanics at Argenton Automotive Repairs or by Valley Motor Auctions that the engine needed replacement.
5. Pursuant to the terms of the extended warranty purchased by the Applicant the warranty provider would pay only $2,000 towards that repair.
6. A replacement engine was provided by New Model Wreckers. New Model Wreckers charged Valley Motors $7,500 inclusive of GST for the engine. The engine was installed by Argenton Automotive Repairs who charged Valley Motors $1,193.50 inclusive of GST for the installation of the replacement engine.
7. At the time the replacement engine was installed the vehicle had 280,870 on the odometer. The replacement engine was not a new engine.
8. There was some discussion between Valley Motors and the Applicant concerning payment for the replacement engine. Ultimately Valley Motors agreed to pay for the entire cost of the replacement engine including installation, to the extent that it was not covered by the extended warranty insurance.
9. The vehicle was serviced on 6 July 2015 when the odometer recorded 286,071 kilometres.
10. On or before 15 September Argenton Automotive Repairs performed work involving attending to oil leaks, brakes and replacing the turbo charger. Invoices issued by Argenton Automotive Repairs for services recorded as being performed on 15 September 2015 record the mileage as 294,510, 295,489 and 296,708 respectively. The Applicant's evidence was that the three invoices from Argenton dated 15 September 2015 actually reflected three services on different dates including 26 August when the servicing of the brakes occurred.
11. On 6 October 2015 the Applicant called Mr Predojevic at Valley Motors and told him she was having problems with the vehicle. She asked him to listen to the motor over the phone.
12. Mr Predojevic advised the Applicant to take the vehicle to Argenton Automotive Repairs for inspection. On that date the engine was diagnosed as having "a bottom end issue". The odometer recorded 299,643 kilometres at that time. The engine has not subsequently been repaired.
13. Valley Motors provided the Applicant with a 12 seat Toyota Hiace loan vehicle on 23 December 2015. The Applicant continued to have possession and use of the loan vehicle at the date of the hearing.
The Applicant seeks compensation in a total amount of $34,538.49 which consists of $8,829.17 expended by the Applicant on hiring alternative vehicles for the purposes of conducting her business, $4,087.85 being out of pocket expenses including cleaning agents, taxis, towing, insurance, interest on finance, a full detail of the vehicle and the cost of a vehicle inspection report, $1,602, being 12 months registration and compulsory third party insurance, and $20,019.47, being the payout figure provided by Speedy Finance as at 29 February 2016.
The Applicant relies upon a report from Mr Matt O'Brien of MOB Engines who stripped the engine after it had been diagnosed with the "bottom end issue". Mr O'Brien identified a number of issues with the engine as follows: a broken oil pressure sensor wire; the number one injector was very oily and showed signs of weeping from the top; the copper washer which should sit between the injector and the injector seat was not found; the oil smelt slightly burnt and old; the harmonic balancer rubber had been damaged; the number four cylinder intake rocker arm had been dislodged from its correct position and was missing the roller tip; the passenger side balance shaft was not timed correctly; the number four piston had signs of grabbing which had left deep grooves in the cylinder bore and deep abrasions on the piston; the oil pump was badly worn with signs of foreign material, most likely metal from the cam shaft lobe; and the crank shaft conrod bearings and balance shaft bearings showed signs of lack of oil and foreign material in the system.
Mr O'Brien stated that because the roller tip was missing from the rocker arm, the intake valve wasn't fully opening and the cam shaft had deep grooves in it from the rocker arm hitting on it instead of the roller tip.
The Respondents noted a number of difficulties with this report. Mr O'Brien did not identify his qualifications. He had not complied with the Code of Conduct for expert witnesses and he did not provide any explanation of the source of the problems that he identified or whether they had been the result of a faulty engine, poor workmanship on the part of the mechanics who had serviced it or a failure to service it appropriately.
However, ultimately it appeared that Mr O'Brien's findings were not controversial. The Respondents indicated that they did not dispute the contents of the report. They suggested it was common ground that the problems identified by Mr O'Brien existed in the engine in October 2015. The Respondents pointed out that the issue between the parties is the cause of the problem and in particular whether the Applicant has established that the engine was not of acceptable quality when supplied. The Respondents pointed out that at the time the vehicle finally broke down in October 2015 the vehicle was over 3,000 kilometres beyond the recommended interval for an oil change. The Respondents suggest that the damage identified by Mr O'Brien demonstrated that the Applicant had continued to drive the vehicle when problems with the engine must have been apparent.
[2]
Consideration
As noted above the Applicant relies upon the consumer guarantees provided by ss54 and 55 of the ACL which provide:
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.
55 Guarantee as to fitness for any disclosed purpose etc.
(1) If:
(a) a person (the supplier ) 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 reasonably fit for any disclosed purpose, and for any purpose for which the supplier represents that they are reasonably fit.
(2) A disclosed purpose is a particular purpose (whether or not that purpose is a purpose for which the goods are commonly supplied) for which the goods are being acquired by the consumer and that:
(a) the consumer makes known, expressly or by implication, to:
(i) the supplier; or
(ii) a person by whom any prior negotiations or arrangements in relation to the acquisition of the goods were conducted or made; or
(b) the consumer makes known to the manufacturer of the goods either directly or through the supplier or the person referred to in paragraph (a)(ii).
(3) This section does not apply if the circumstances show that the consumer did not rely on, or that it was unreasonable for the consumer to rely on, the skill or judgment of the supplier, the person referred to in subsection (2)(a)(ii) or the manufacturer, as the case may be.
The Respondents defend the case on a number of bases: firstly, they submit that as the vehicle was a sale to the Applicant by auction, the consumer guarantees do not apply; secondly, they submit that the goods had not been proved to be not of acceptable quality at the time of the sale. In respect of this proposition the Respondents seek to rely on ss54(6) and 54(7).
In regard to s 54(6) the Respondents submit that the damage was caused by the Applicant driving the vehicle while damaged and failing to have the vehicle serviced at appropriate intervals.
Although the Respondents conceded that the vehicle was not fit for the purpose disclosed by the Applicant, that is for use in her business transporting passengers, in particular conducting winery tours and airport shuttles, the Respondents submitted that the circumstances show that the Applicant did not rely upon Valley Motors in deciding that the vehicle was fit for that purpose.
[3]
Jurisdiction
Before determining the proceedings I must conclude that the Tribunal has jurisdiction:
Each of the Respondents is a "supplier" within the meaning of s 79D of the Fair Trading Act 1987 (NSW), that is, a person who, in the course of carrying on a business, supplies "goods". With respect to Valley Motors, the Applicant is a "consumer" within the meaning of s 79D of the Fair Trading Act, that is a natural person to whom Valley Motors has supplied or agreed to supply goods. The claim by the Applicant against Valley Motors is a consumer claim within the meaning of s 79E of the Fair Trading Act in that it is a claim for the payment of a specified sum of money which arises from a supply of goods by Valley Motors to the Applicant.
The Tribunal therefore has jurisdiction to determine the Applicant's claim against Valley Motors pursuant to s 79I and s 79J of the Fair Trading Act.
I do not find the Tribunal has jurisdiction over any claim the Applicant may have against New Model Wreckers Pty Ltd. New Model Wreckers did not supply any goods to the Applicant. The evidence is clear that New Model Wreckers supplied an engine to Valley Motors. The Applicant did not enter into any contract with New Model Wreckers in relation to the engine. New Model Wreckers invoiced Valley Motors and shipped the engine directly to Argenton Automotive Repairs. Although $2,000 of the price of the replacement engine was provided by the extended warranty insurance which the Applicant had purchased, that is not sufficient to make New Model Wreckers a supplier in relation to the Applicant. There is no cross claim by Valley Motors against New Model Wreckers. Therefore I have no jurisdiction to determine the claim against New Model Wreckers which will be dismissed.
[4]
Determination
The issues to be determined are:
1. Was the motor vehicle sold by auction?
2. Was the vehicle as originally sold of acceptable quality?
3. Do the circumstances indicate that the Applicant did not rely upon the skill and judgment of Valley Motors in relation to the vehicle's fitness for the purpose to which the Applicant proposed to put it.
4. If the Applicant establishes liability on the part of Valley Motors, to what compensation is she entitled?
[5]
Was the motor vehicle sold by auction?
The evidence of Mr Arthur was that he conducted an auction, which included the vehicle acquired by the Applicant, at 5 pm on 17 February 2015. Mr Arthur stated that at that time the paper bid lodged by the Applicant was the highest bid for the vehicle which was therefore sold to the Applicant.
Ms Cooper gave evidence that she recorded on the Registration and Absentee Bidders Form that she had rung the Applicant on 18 February 2015 and advised her that the bid was successful and she was the purchaser of the vehicle. Ms Cooper did not specifically remember the phone call but the Applicant did not deny that she had received a phone call.
The Applicant disputed that the vehicle had been sold by auction. She stated that she had been at the Valley Motors premises, until 4.15 pm at least, on 17 February 2015 and there had been no sign of an auction. She also gave evidence that she had agreed a price of $13,000 with Mr Arthur. She had been asked to sign documents which she had not read or understood and that the vehicle had thereafter been moved from the lot to a place where cars which had been sold were kept. The Applicant also asserted that a "Sold" sticker had been placed on the car.
While I do not find that the Applicant is being deliberately untruthful about this issue, I am unable to accept her evidence concerning the moving of the vehicle from the lot and the placing of a "sold" sticker upon it. Mr Arthur denied that either had occurred and the Applicant's evidence was not supported by Ms Henderson who was present at the time.
There are some features in the way in which the Respondent conducts its business which raise doubts as to whether the auction process was a genuine auction process.
Mr Arthur acknowledged that there was no set time at which any vehicle might be put to auction. The auctions took place every afternoon but not always at the same time. A vehicle on which an acceptable absentee bid had been received would usually go to auction the same day. Mr Helliar stated that there had been occasions when he had had to call an absentee bidder to inform them that they had not been successful with their bids. The clear implication of that evidence was that most of the time, once an absentee bid was received, it would be successful.
There is no definition of "sale by auction" in the ACL or the Competition and Consumer Act 2010 (Cth) to which the ACL is a schedule. There is some authority on the requirements for a sale to be a sale by auction in other contexts. In Smythe v Thomas (2007) 71 NSWLR 537, Rein AJ determined that the online bidding process conducted by EBay was an auction and gave rise to a binding contract. In that case his Honour concluded at [35] that an online auction is a species of auction, having noted at [28] a number of differences between "a traditional auction" and an "online auction".
In Tender Centre Pty Ltd v The Director General, Department of Fair Trading [2001] NSWSC 153 Windeyer J canvassed the meaning of the term 'auction' in considering whether the business operated by the Tender Centre was the "business of an auctioneer" for the purposes of the Pawnbrokers and Second Hand Dealers Act 1996. In the course of that Judgment his Honour stated:
[8] Counsel for the plaintiff provided a number of dictionary and text definitions of "auction" which I set out:
a. Oxford English Dictionary: This notes the derivation of auction from the Latin to increase and gives the first meaning as "The action of increasing, growth". The second and more usual meaning attributed is Auction - a public sale in which each bidder offers an increase upon the price offered by the preceding, the article put up being sold to the highest bidder.
b. The Shorter Oxford English Dictionary: Auction - A (usually public) sale in which articles are sold to or reserved for the highest bidder.
To those can be added some definitions supplied by the defendant, namely,
a. Macquarie Dictionary: Auction - a public sale at which property or goods are sold to the highest bidder.
b. Websters International Dictionary: Auction - a public sale of property or goods to the highest bidder (as by successive increased bids).
c. Shorter Oxford Dictionary: Auction - a public sale in which each bidder offers more than the last previous bid, the article being put up being sold to the highest bidder.
Halsbury's Laws of England 4th Ed Vol 2 para901 says that an auction is "a manner of selling or letting property by bids, usually to the highest bidder by public competition" with bids extracted by the auctioneer under the excitement of open competition. There is then a note which states "However, there exist auctions where the lot goes to the highest bidder, but the element of open competition is lacking in that bidders are unaware of rival bids. Postal auctions provide an example. These are conducted in a manner similar to that of selling by tenders."
[9] I think it fair to say that the predominant idea of an auction as expressed in the foregoing references indicates a public sale where bidders have a chance to re-bid.
[10] There is an interesting discussion of the difference between a sale by tender and a sale by auction in the judgment of Lord Templeman in Harvela Ltd v Royal Trust Co of Canada (CI) Ltd [1986] 1 AC 207 at 230. There his Lordship said:
Where a vendor undertakes to sell to the highest bidder, the vendor may conduct the sale by auction or by fixed bidding. In an auction sale each bidder may adjust his bid by reference to rival bids. In an auction sale the purchaser pays more than any other bidder is prepared to pay to secure the property. The purchaser does not necessarily pay as much as the purchaser was prepared to pay to secure the property. ... In a fixed bidding sale, a bidder may not adjust his bid. Each bidder specifies a fixed amount which he hopes will be sufficient, but not more than sufficient, to exceed any other bid. The purchaser in a fixed bidding sales does not necessarily pay as much as the purchaser was prepared to pay to secure the property. But any bidder who specifies less than his best price knowingly takes a risk of being outbid. ... Where there are two bidders with ample resources, each determined to secure the property and to prevent the other bidder from acquiring the property, the stronger will prevail in the fixed bidding sale and may pay more than in an auction which is decided not by the strength of the stronger but by the weakness of the weaker of the two bidders. On the other hand an open auction provides the stimulus of perceived bidding and compels each bidder, except the purchaser, to bid up to his maximum.
Thus auction sales and fixed bidding sales are liable to affect vendors and purchasers in different ways and to produce different results.
I consider with respect that this passage expresses the generally held view of the difference between auction and tender.
In that decision his Honour considered the broader definition of auction in the Auctioneers, Stock and Station and Real Estate and Business Agents Act 1941, which was in the following terms:
"Auction Sale," "sale by auction," "sell by way of auction," and expressions of a similar character mean the selling of any estate, goods, or effects whatsoever by outcry, by what is known as Dutch auction, by knocking-down of hammer, candle, lot, parcel, instrument, machine, or by any other mode whereby the highest, the lowest, or any bidder is the purchaser; or whereby the first person who claims the property submitted for sale at a certain price named by the person acting as auctioneer is the purchaser; or whereby there is a competition for the purchase of any estate, goods, or effects whatsoever in any way commonly known and understood to be by way of auction, and shall be deemed to include the selling by outcry or in any other manner before mentioned in any public place or in any room, or mart, or place to which the public are admitted or have access, whether or not the sale has been advertised to take place.
The Auctioneers, Stock and Station and Real Estate and Business Agents Act has been replaced by the Property Stock and Business Agents Act 2002, which defines "auction" in s 3 as follows:
"auction" means the sale of property by any means (including the Internet) whereby:
(a) the highest, the lowest, or any bidder is the purchaser, or the first person who claims the property submitted for sale at a certain price named by the person acting as auctioneer is the purchaser, or
(b) there is a competition for the purchase of the property in any way commonly known and understood to be by auction.
It is not necessary that I determine definitively the meaning of the term 'sale by auction' in the ACL. Whatever the limits of the concept, a public process by which more than one potential purchaser may put forward a bid for a particular item submitted for sale, with the item being sold to the highest bidder, will constitute a sale by auction. Although the process by which Valley Motors appears to conduct its "auctions" would not seem conducive to competing bids being made by alternative purchasers once an acceptable paper bid has been received, the evidence of Mr Helliar that on occasions that did occur persuades me on the balance of probabilities that the process did allow such bids and that, consequently, the sale of the vehicle to the Applicant in this case was a sale by auction.
Mr Arthur stated that he did conduct an auction process to which any member of the public present at the time of the auction would have been entitled to bid and at which the vehicle would have been sold to the highest bidder. I note that the Applicant signed a document which clearly stated that the vehicle was going to be auctioned and that she initialled the paragraph in bold, identified as Part 3 of the document, at the bottom of the page on that form, which is set out in sub-paragraph (12) of paragraph 10 above. If I had concluded that the vehicle had been marked as 'sold' at the time the Applicant signed the absentee bid form or that the vehicle had been moved off the lot at the time the Applicant signed the absentee bid form, I would not have found that the vehicle had been sold by auction but, as noted above, I do not accept the Applicant's evidence in that regard. I therefore find that the Applicant did acquire the vehicle at auction. In consequence neither of the consumer guarantees in ss54 or 55 of the ACL was applicable to the sale of the vehicle.
The replacement engine was not sold at auction. However, although Valley Motors did provide the replacement engine to the Applicant, I do not consider that Valley Motors supplied the replacement engine within the definition of "supply" in s 2 of the ACL, that is:
"supply ", when used as a verb, includes:
(a) in relation to goods--supply (including re-supply) by way of sale, exchange, lease, hire or hire-purchase; and
(b) in relation to services--provide, grant or confer;
and, when used as a noun, has a corresponding meaning, and supplied and supplier have corresponding meanings.
I note that s 5 of the ACL deals with when a donation is a 'supply' in the following terms:
5 When donations are treated as supplies or acquisitions
(1) For the purposes of this Schedule, other than Parts 3-3, 3-4, 4-3 and 4-4:
(a) a donation of goods or services is not treated as a supply of the goods or services unless the donation is for promotional purposes; and
(b) receipt of a donation of goods or services is not treated as an acquisition of the goods or services unless the donation is for promotional purposes.
(2) For the purposes of Parts 3-3, 3-4, 4-3 and 4-4:
(a) any donation of goods or services is treated as a supply of the goods or services; and
(b) receipt of any donation of goods or services is treated as an acquisition of the goods or services.
Sections 54 and 55 of the ACL are in Part 3.2 of the ACL. I do not suggest that the provision of the replacement engine by Valley Motors was a "donation" but the provisions of s 5 reinforce my view that the provision of the replacement engine by Valley Motors free of charge to the Applicant was not a "supply" of the engine to the Applicant for the purposes of the ACL.
It is therefore not strictly necessary to deal with the other issues raised by the Applicant's case, however I record my conclusions as follows:
[6]
Was the vehicle of acceptable quality?
I am not satisfied on the evidence that the vehicle was not of acceptable quality, having regard to its price, on 17 February 2015. The Applicant asserted that the vehicle was suffering problems immediately from the time she took delivery of it with leaking engine oil, but the vehicle did at that time pass a safety check. The vehicle was driven for a considerable period before it initially broke down. I also consider that even if the vehicle was not of acceptable quality by reason of any defect in the engine, the Respondent rectified that defect by providing a replacement engine. I am not satisfied that the replacement engine was not of acceptable quality. Again the replacement engine was driven for a significant distance after its installation and was not serviced at the appropriate intervals as identified on the service sticker placed on the vehicle by Argenton Automotive Repairs. At the time it broke down, the vehicle had been driven 3,572 km past the recommended interval for an oil change.
As noted above, the evidence of Mr O'Brien as to the condition of the engine when dismantled was not disputed by the Respondent. The issue was whether the condition of the engine was due to the Applicant's treatment of it. The Applicant adduced no evidence to suggest that the condition of the engine was indicative that it had not been of acceptable quality at the time it was installed into the vehicle.
[7]
Did the Applicant rely upon Valley Motors' skill and judgment?
I conclude that the Applicant did not rely upon the skill and judgment of Valley Motors in determining that the vehicle was fit for the purposes for which she intended to put it.
There was an issue on the evidence between the Applicant and Ms Henderson on the one hand and Mr Arthur on the other as to what had been said by Mr Arthur on 17 February 2015. It was not in dispute that the Applicant had told Mr Arthur that she intended to use the vehicle in her tour and transport business. The Applicant asserted that Mr Arthur had told her that:
It was a good vehicle and suitable for my business", that 70,000 km was "barely run in for a diesel" and that the vehicle would "serve the purpose I needed it for".
Ms Henderson's evidence was that Mr Arthur said that the Imax:
"was a good vehicle that would serve [the applicant] well in her business and that the high mileage was no worry as it was a diesel and they were barely run in at that amount of kilometres".
Mr Arthur's statutory declaration included the following:
"Christine told me she was interested in the vehicle, as it was the first one she had seen within her price range. I cautioned Christine about making any offer for the IMAX. I told her that considering the huge kilometres the vehicle had travelled and her intended use, that the remaining lifespan of the IMAX could be very short indeed. I told Christine the IMAX was not suitable for her intended use. I further explained to Christine that with motor vehicles you only get what you pay for.
Christine then asked me how long I thought the motor might last in the IMAX. I told Christine given the intended use, I would be surprised if the motor lasted more than a further 20,000 kilometres. Christine asked me what would happen then. I told Christine she would then have to replace the motor. Christine did not respond to what I said, and she continued to inspect the IMAX.
Christine said she would like to proceed with making a bid. I told Christine that if this was the case I strongly suggested to her that she purchase an aftermarket "National Warranty Company" vehicle warranty. I explained that the warranty was not a panacea for all ills and its scope and levels of payment had limitations, but it could come in handy. Christine agreed to buy a 12 month aftermarket warranty for $300.00 if her bid was successful.
Although, as noted above, the Applicant asked Mr Arthur some questions and Mr Helliar asked the Applicant and Ms Henderson questions, no serious or effective challenge was made to the credibility of any witness.
I carefully observed each of the witnesses while they gave evidence. I formed the impression that each was seeking to be honest but that the evidence of each was coloured by their concern to advance their own case (in the case of the applicant) or that of the party for whom they giving evidence (in the case of Ms Henderson and Mr Arthur). Although Ms Henderson's evidence on this issue did corroborate that of the Applicant, I am mindful of the risk that her evidence has been affected by her close relationship with the Applicant. I have no doubt, having observed the Applicant, that she and her daughter-in-law have discussed the events of 17 February 2015 frequently.
As I have found that the vehicle was sold by auction, the consumer guarantee of fitness for purpose does not apply and therefore my conclusion on this issue is not determinative of the claim.
However, were it necessary to make a finding, I would conclude that Mr Arthur's version of the conversation, while somewhat exaggerated, is closer to the truth. I would conclude that Mr Arthur did not represent that the vehicle would be suitable for the Applicant's business. The proposition that even a diesel engine is "barely run in" at 270,000 kms does not appear to me to have been a statement that was likely to be made by even the most eager of car salespersons.
I would find that Mr Arthur did warn the Applicant that the vehicle would not be suitable for the level of usage she proposed to put it. I would find that the Applicant was concerned only with the price of the vehicle, which she conceded was all she could afford, and did not rely upon Mr Arthur or Valley Motors in determining that the vehicle was fit for her purposes.
The Applicant did not identify any respect in which it could be alleged that the Second Respondent, New Model Wreckers, could be held liable to her for the supply of the engine. The replacement engine was supplied by New Model Wreckers to Valley Motors, not to the Applicant. The engine was a second hand engine and New Model Wreckers was not a manufacturer of the engine. In those circumstances there is no basis to find that any guarantee in respect of the replacement engine beyond the express warranty provided by New Model Wreckers was applicable. The express warranty provided by New Model Wreckers was a 90 day warranty. The engine was delivered to Argenton Motor Repairs on 10 June 2015 and delivered to the Applicant, installed in the vehicle, on 16 June 2015. Ninety days from 16 June 2015 expired on 14 September 2015. In any event, as I have noted above, even if the Applicant had had a valid claim against New Model Wreckers, the Tribunal would not have jurisdiction with respect to that claim. Although New Model Wreckers was apparently joined to the proceedings at the Tribunal's suggestion, neither the Applicant nor either of the Respondents was able to explain why that had occurred.
[8]
The measure of compensation
Although it is unnecessary for me to assess compensation I note that the Applicant's claims were, on any version of events, grossly overstated.
The damages sought by the Applicant included not only the running costs for the subject vehicle but also hire charges for vehicles said to have been hired to replace the subject vehicle and the interest and full principal repayment owing to the finance company.
The Applicant's claims ignore the fact that the Applicant would have incurred running costs for whichever vehicle she utilised in her business and that the Applicant has had the benefit of a loan car from Valley Motors for much of the period since the Imax broke down. A number of the vehicle hire charges claimed by the Applicant were for vehicles which could not have been hired by reason of the breakdown of the Imax, as the hire charges related to periods when the Applicant was shown by the evidence to have been utilising a loan vehicle provided by Valley Motors.
The claim for the payout to the finance company includes the additional $5,000 the Applicant borrowed at the time she took the loan together with all interest costs. The $5,000 cannot be recoverable on any basis and the interest costs again reflect running costs the Applicant would have incurred regardless of what vehicle she had acquired.
The Applicant did not satisfy me on the balance of probabilities that any of the vehicle hire charges were a direct or foreseeable consequence of the breakdown of the motor vehicle. Valley Motors provided to the Applicant a loan vehicle for lengthy periods when she returned the subject vehicle for repair and I am not satisfied that, when the Applicant chose to use an alternative vehicle, that was necessitated by the breakdown of the Imax.
If I had been required to assess the damages payable to the Applicant I would have awarded no more than the $13,000 she paid for the vehicle. The Applicant has had over 14 months use of the Imax or loan vehicles provided to her by Valley Motors. The Applicant did not establish that, if she had not purchased the Imax, she would have acquired another vehicle for a similar cost. The evidence tended to suggest that she would not have been able to do so and that this was the only vehicle that she believed met her requirements which had been available at a price range she could afford. In those circumstances the Applicant would have been required to hire vehicles for her business throughout the period since February 2015 and she has not established that, in so hiring vehicles, she would have spent any less than she has in finance charges and other running costs throughout the relevant period. However I do not make a final determination on that issue.
I will make orders that the application be dismissed.
Neither Respondent was legally represented at the hearing, although there was some suggestion from Mr Helliar that Valley Motors had engaged solicitors at some point. These proceedings were brought in the Consumer and Commercial Division of the Tribunal and involved a claim for more than $30,000. In those circumstances under Rule 38 of the Civil and Administrative Tribunal Rules 2014 (NSW) the Tribunal is empowered to award costs in the absence of special circumstances.
The usual rule in relation to costs is that the successful party should receive an order for their costs. Although I expressly do not find that the successful Respondents have incurred any recoverable costs, I will make an order that the Applicant pay the Respondents' costs of the claim, as agreed or assessed. Whether any costs incurred by the Respondents are recoverable pursuant to that order is a matter for resolution by agreement between the parties or determination by a costs assessor.
DAC Robertson
Senior Member
Civil and Administrative Tribunal of New South Wales
26 July 2016
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: 05 October 2016
Parties
Applicant/Plaintiff:
Solomons
Respondent/Defendant:
Valley Motor Auctions Pty Ltd & New Model Wreckers Pty Ltd