Sowter v Heartland Penrith Pty Ltd and General Motors Holden NSC Pty Ltd

Jurisdiction

1. Part 6A of the Fair Trading Act 1987 ("the Act") grants jurisdiction to the Tribunal for consumer claims.
2. The applicant is a "consumer" in that as a natural person the respondent supplier has supplied goods to her. The goods have also been ordinarily acquired for personal, domestic or household use or consumption.
3. A consumer claim can also be brought against a party who is not a direct supplier of goods. At section 79E(2) of the Act 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. In this claim the second respondent is the manufacturer and / or Australian importer of the goods.
4. On 30 April 2019 the applicant purchased a Holden Colorado for the sum of $50,000.01. An amount of $5,000.00 was allowed from that sum for a trade -in vehicle. On the purchase agreement it stated the vehicle was "a driven demo with approximately 3,000kms" and that "warranty and registration started from 31/12/2018". A dealer guarantee under the Motor Dealers and Repairers Act 2013 was also supplied.
5. The vehicle was provided in NSW as prescribed in Section 79K(1) of the Act. The proceedings have been brought within the 3-year limitation period prescribed under Section 79L. The claim is within the monetary limit of consumer claims to the Tribunal. Under section 79N the applicant sought an order that requires a respondent to pay to the claimant a specified amount of money
6. The Tribunal has jurisdiction to hear the matter.

The relevant law for the consumer guarantees in relation to goods

1. Section 28 of the Act stipulates that Australian Consumer Law ("ACL") applies to the Tribunal's jurisdiction. The ACL is set out in Schedule 2 to the Schedule 2 of the Competition and Consumer Act 2010 (previously known as the Trade Practices Act 1974 (TPA)).
2. The ACL contains the following consumer guarantees in respect of goods that are relevant to this claim. Section 54 of the ACL states that goods must be of acceptable quality. Section 54(2) states goods are of acceptable quality when they are (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. The applicant alleges the vehicle is not up to the manufacturer's standard, the appearance is unacceptable due to creases and ripples and she considers it unsafe for towing as the brakes are defective.
3. Further, goods are not of unacceptable quality if the consumer is at fault. At section 54(6) goods do not fail to be of acceptable quality if the consumer causes them to become of unacceptable quality, or fails to take reasonable steps to prevent them from becoming of unacceptable quality or they are damaged by abnormal use. Under section 54(7) goods do not fail to be of acceptable quality if the consumer acquiring the goods examines them before the consumer agrees to the supply of the good and such examination ought reasonably to have revealed that the goods were not of acceptable quality.
4. At section 55(1) of the ACL there is a guarantee as to fitness for any disclosed purpose. At section 55(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: the consumer makes known to the supplied. The applicant alleges she made know to Heartland at the time of purchase that she required the vehicle to tow her 26-foot caravan shown in a photo attached to her documents.
5. Finally, if the Tribunal were to find there had been a breach of the section 54 consumer guarantee as to acceptable quality, and the breach is not capable of remedy, or breaches are not remedied within a reasonable time, as is alleged by the applicant in this case, section 259(2) of the ACL empowers the consumer to bring an action against the supplier to recover all reasonable costs incurred by the consumer in having the failure so remedied or notify the supplier the goods are rejected and the grounds for such rejection. The parties conceded the vehicle was rejected. As the applicant seeks refund of the purchase price she would have to prove the breach results in the vehicle being a "major failure". Section 260 defines such a failure and this section has also been subject of judicial comment by the Appeal Panel of the Tribunal.
6. In Safi v Heartland Motors Pty Ltd t/as Heartland Chrysler [2016] NSWCATAP 80 (11 April 2016) at [101-102], the Tribunal Appeal Panel said the factors to consider for a finding of "major failure" are: 101 Having regard to these cases and the commentary, where there is noncompliance with the guarantee of acceptable quality, as alleged in this case, we find that the following matters will be relevant to the question of whether this amounts to a "major failure" under s 260(a): (1) A major failure may be constituted by one defect or a series of specific or individual defects which, when taken as a whole, constitute a major failure; (2) The test of whether the goods "would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure" is an objective one; (3) A "reasonable consumer" would expect teething problems, even in a new vehicle; (4) The question to ask is whether the reasonable consumer, given the option of acquiring that particular good or alternatively purchasing either nothing or a different model, would not have acquired the good; (5) Defects which result in goods failing to comply with the guarantee of acceptable quality will not invariably be a major failure and it will depend on the nature and extent of the failure; and (6) The cost of repair, in proportion to the purchase price, and the question of whether the defects can be remedied easily in a timely manner are relevant considerations. 102 In our view, the purchase price for the goods and the nature of the defect are also relevant considerations for a "reasonable consumer".

Evidence of the parties

1. The after-purchase service / repair history according to the documents of Heartland and oral evidence and written submissions was as follows: 1. 6 May 2019 - 1-month free inspection and also "defects to be fixed and carried out as required". A new part was installed at the cost of the applicant. 2. 25 June 2019 - Fit tube liner - removed support bar and tie down points, fitted tube liner. The vehicle was checked and road tested for a reported transmission shudder and no defect could be detected. 3. 11 October 2019 - check transmission for harsh downshift - checked and found no defects, road tested and unable to reproduce concern. A 12,000kms 1-year service was completed A loan car was provided. There was no charge as a warranty repair. 4. 9 December 2019 - checked for reported brake pedal sinking to floor - vehicle was tested and concern could not be reproduced. The master and booster were replaced under warranty as a precaution. The vehicle performed well when road tested. A rattle on take-off was repaired by replacing rear DPF bracket. All done as a warranty repair. 5. 31 December 2019 - check for engine light on and no power - the applicable fault was found and accelerator pedal replaced as a no coast warranty repair. 6. 27 February 2020 - checked brakes as customer advised pedal went to floor and had to use handbrake to stop. Unable to reproduce problem when road tested. An EBCM was replaced as a precaution and brakes were bled and tested. There was no charge as a warranty repair. 7. 31 July 2020 - checked vehicle as it was alleged it could not accelerate past 40kmh and it felt like transmission hard through the gears - vehicle road tested many times and the problem could not be reproduced. No defects found. The vehicle was given a 24,000kms 2-year service.
2. The vehicle in dispute was subject of a Fair Trading Complaint inspection advice. That report stated that "defective or consequential damage and or incomplete items have been deemed but cannot be attributed to be the responsibility of the trader based on evidence provided". In relation to alleged paint ripples, the reporter said "inspected other vehicles, considered to be consistent with build quality".
3. On 22 September 2020 the applicant provided a hand written statement of evidence. This largely set out the repair events an indicated in the repair history of the documents of Heartland. The thrust of the case was that the vehicle was not capable of towing a 26-foot caravan she owned. The brakes could fail coming down Moonee Bridge. This may cause injury or death and was unsafe.
4. She said the vehicle had a scratch on the right side door when she got the vehicle home. A friend of the applicant, Mr Hardy, also gave oral evidence about his negotiation of the purchase of the vehicle. His said there was a mark in the passenger door on inspection. Heartland had it repaired. He paid for the vehicle. The trade-in vehicle was handed over. He said that only when the vehicle was brought home did he notice "ripples". He took photos of these. When he complained of this ripples about a week later he was told that was the appearance of the vehicle and the way they were manufactured. Both Mr Hardy and Ms Sowter alleged they were told the vehicle was "brand new" and they only raised it had some mileage when they picked it up. However, nothing in the application indicated a claim was made for not being given a new vehicle. The purchase document made it very clear it was a demonstrator model with some use.
5. In their written points of defence the manufacturer stated a genuine tow-pack was included with the vehicle. During purchase and the proceeding the applicant gave no specifications of the caravan, particularly as to the loading of it and weight. Heartland repaired any manufacturing defects attributed to quality during the lifespan of the vehicle at no cost to the applicant. Any defects were minor and not a threat to the safety of the vehicle. In relation to the alleged braking system failure, Holden submitted: A diagram of these parts and their location in the Colorado Engine bay as part of the vehicle brake system is provided in Annexure D (Refer Annexure D page 17). The Brake Master Cylinder serves as the main valve that pushes brake fluid through the brake lines so that the brake calipers can squeeze the pads against the rotors. The Brake Booster assists with brake pedal efforts and feel via it's set up to act with the master cylinder in order to give higher hydraulic pressure to the brakes and/or lower force applied on the brake pedal. This issue was not deemed a failure at all by GM Holden as no fault was found. ….vehicle operated the SAME as any like-for-like vehicle comparisons in brake performance & all test demonstrated the vehicle was in good condition performing as per design intent. In the end, once all the testing confirmed this, the TAC recommendation was to replace the Electronic Brake Control Module assembly purely as a PRECAUTIONIARY measure. That way GM Holden was confident that ALL component affecting the operation of the braking system had been replaced just in case something happened to have been missed. This instilled 100% confidence into no issues were evident or underlying in the brake system. (Refer Annexure F pages 19-37)
6. In short Holden submitted the vehicle was quite durable, fit for purpose of towing a caravan as per the advertised specifications in the Colorado Owner's Manual. Any other issues were minor failures under the ACL and were all replaced under warranty at no cost to the applicant. Also, the applicant had not demonstrated any expert technical evidence to establish her case as required via her burden of proof.
7. Holden further submitted that because the vehicle is towed, handling, durability and economy may be affected. Most of the defects alleged were not found by anyone else and may have occurred during different towing conditions.

Findings and determination

1. An applicant bears the onus of proving his or her her case on the balance of probabilities with the evidence provided to the Tribunal. The evidence provided does not support the claim that the vehicle had unacceptable marks or ripples at purchase or that it is a "major failure" at law, or, in fact, that it is defective at all. The failure of the applicant to acquire an independent expert report as to the alleged unsafety of the vehicle due to brake issues and the rippled body is critical in showing she has no discharged her onus to prove her case.
2. Mr Hardy gave no evidence that it was made clear at the time of purchase that an essential purpose of the vehicle was for it to tow a 26-foot caravan. No evidence was given that it would have been required to tow a vehicle outside the capacity indicated in the vehicle manual. As required at section 55(1) of the ACL for breach of a guarantee as to fitness for any disclosed purpose, the Tribunal is not satisfied the applicant disclosed a particular purpose for which the vehicle was being purchased. In any event, she has not proved it is not capable of towing a vehicle within the specifications set out in the manual or that the brake system is faulty. The extensive service history of Heartland shows a consistent inability of professionals to be able to reproduce problems of which Ms Sowter complained. Furthermore, in relation to the brake complaints the requisite parts were repaired and / or replaced through an abundance of caution even if a defect could not be found. To add to the deficiencies in the applicant's evidence, the only independent evidence of the alleged defects with the vehicle was the Complaint Inspection Advice report of the Fair Trading inspector. That expect said any damage or defects could not be attributed to the responsibility of either of the respondents. The alleged defect of rippling was said to be, as stated by the respondents, no defect at all but a feature of the body work and build quality of that vehicle. Mr Hardy said he inspected the vehicle before purchase and one mark on a door was repaired. Under section 54(7) of the ACL the vehicle does not fail to be of acceptable quality because this inspection prior to the supply of the Colorado ought reasonably have revealed the alleged defect. Ms Sowter had a quote dated 2 March 2020 for $5,380.10 to repair damage on the doors. An analysis of this quote shows that it is more an offer to respray the vehicle. As the rippling is not a defect this is not a remedy that arises under a breach of any consumer guarantee.
3. In the absence of any independent expert report the applicant has been unable to prove that the vehicle is not safe and that the brake system is faulty or that the body is rippling when it ought not. There is no independent expert evidence to show the vehicle is not capable of towing the applicant's caravan. Even if were not capable of doing so, the Tribunal is not satisfied that the applicant made it clear in the purchase negotiations that an essential purpose for the vehicle was to tow that van with its particular specifications. The respondents have done all they can to address the complaints of Ms Sowter.
4. The vehicle is not major failure, or a failure in any way. The series of specific or individual defects do not exist and / or have been addressed anyway. There was no way Ms Sowter would not have been acquired the vehicle as there were no defects with which she ought to have been fully acquainted. She has borne no cost of precautionary repairs because they were done as warranty repairs.

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: 20 August 2021