Thompson v Drackeman Holdings Pty Ltd t/a Crazy Dave's Deals on Wheels [2025] QCAT 178

Motor Dealers and Chattel Auctioneers Act 2014 (Qld), Schedule 1, s 3B, s 4(2)

Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 42

Medtel Pty Ltd v Courtney [2003] FCAFC 151; (2003) 130 FCR 182

• [1] The Applicant purchased a grey manual 2013 Volkswagen Amarok utility ('the vehicle') from the Respondent for $24,752 including a trade-in allowance of $6,000. The parties signed a contract on 1 August 2022 and the Applicant took delivery of the vehicle on 3 August 2022. The vehicle's build date is 1/2013 and, on the date of sale, the vehicle's odometer reading was 256,239 kilometres.
• [2] On 3 September 2022, the Applicant was driving on the highway when the vehicle broke down and required towing. The vehicle has not been driven since.
• [3] Pursuant to Schedule 1, section 3B of the Motor Dealers and Chattel Auctioneers Act 2014 (Qld), the vehicle is classified as a class B warranted vehicle attracting a warranty period that expired when the vehicle had travelled 1,000 kilometres since taking possession or the business day one month after taking possession, whichever the earlier.[1] At the time of breakdown, the vehicle's odometer reading was around 257,300 kilometres, taking it just outside the warranty period.
• [4] The Applicant's partner, Ms Tiffany Knight, applied to the Tribunal for relief against the Respondent pursuant to section 50A of the Fair Trading Act 1989 (Qld) ('the FTA').

• [5] On 18 September 2023, the Tribunal appointed motor vehicle assessor, Mr Robert Haigh, to conduct an assessment of the vehicle, at a cost shared equally by the parties. Mr Haigh produced a Motor Vehicle Assessment Report filed in the Tribunal on 26 October 2023.
• [6] At the hearing of this matter, the Applicant and Ms Knight appeared on their own behalf, and Mr Dave Kenny, the customer sales manager for the Respondent, appeared on behalf of the Respondent.
• [7] The Tribunal called Mr Haigh to attend the hearing and give evidence.

• [8] At the commencement of the hearing, I discussed with the parties the need to correct the Tribunal's records regarding the named applicant, noting that 'Kris Thompson' is named as the purchaser in the contract for the sale of the vehicle and is the owner of the vehicle.
• [9] I confirm my finding that the correctly named applicant in this proceeding is 'Kris Thompson'.
• [10] Pursuant to section 42 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) ('the QCAT Act'), I confirm my order that 'Tiffany Knight' is removed as the Applicant in this proceeding and replaced by 'Kris Thompson'.

• [11] Section 16 of the FTA provides that the Australian Consumer Law text applies as a law of Queensland and as such may be referred to as the Australian Consumer Law (Queensland) ('the ACLQ').
• [12] Pursuant to section 50A(1) of the FTA, a person may apply to the Tribunal for an action under the ACLQ relating to a motor vehicle where the amount sought or value of other relief is not more than $100,000.
• [13] In these circumstances, the Tribunal may make an order, or combined orders, that an amount is payable or not payable by a party, an order requiring a party to perform work to rectify a defect, or an order requiring a party to return goods.[2]
• [14] I am satisfied the Tribunal has jurisdiction to hear and determine this matter.

• [15] Section 54(1) of the ACLQ provides that, where a person supplies goods in trade or commerce, the goods are guaranteed to be of 'acceptable quality'.
• [16] Section 54 subsections (2) and (3) of the ACLQ provide that:

(2) Goods are of acceptable quality if 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 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.

• [17] The time at which goods are to be of acceptable quality is the time at which the goods are supplied to the consumer: Medtel Pty Ltd v Courtney [2003] FCAFC 151; (2003) 130 FCR 182 at [64] and [70]. However, information available after the time of supply may be taken into account in deciding whether the goods were of acceptable quality at the time of supply.
• [18] The test for whether goods are of acceptable quality adopts the 'reasonable consumer' benchmark; that is, a reasonable consumer fully acquainted with the state and condition of the goods (including any hidden defects) having regard to the nature and price of the goods and other circumstances relating to their supply.

Failure to comply with consumer guarantee - available actions

• [19] Where the consumer guarantee is not complied with, the consumer may take certain action against the supplier depending on whether or not the failure to comply can be remedied and is a major failure (as defined[3]).[4]
• [20] In addition, where it was reasonably foreseeable that the consumer would suffer loss or damage as a result of the failure to comply with the guarantee, the consumer may recover damages for such loss or damage from the supplier.[5]

• [21] The Applicant emailed Mr Kenny of the Respondent on 13 September 2022, including the following:

On the 3rd of September I was travelling was north bound on Bruce Highway when the motor started to shudder and blow a lot of smoke and loss of power pulled over off the road where the car started to misfire resulting in it unable to start over or hold revs.

Had the vehicle towed back to home address...where we proceeded to have the mechanic from Littles Automotive come out we believe it may have been the injectors mechanic took them to KM Diesel to have them tested which resulted in unclear results between the cylinders the car was towed to KM Diesels on Monday to have the compression tested in the motor which so far has resulted around $1000.

• [22] The Applicant sent a letter to Mr Kenny dated 4 October 2022, including the following:

I am disappointed because the car has not performed well because the car had issues within the engine and is not driveable due to this, has been confirmed by a diesel specialist who conducted a compression test which has shown issues with cylinders 3 and 4.

To resolve the problem I would like you to repair the vehicle at no charge to me through VW service centre at Kippa Ring.

Enclosed are copies of the receipts and test results.

• [23] The parties exchanged emails over the period September 2022 to February 2023. The Applicant requested that the Respondent pay the KM Diesel invoice and replace the engine. Mr Kenny was prepared to source and install a second-hand engine on the basis that the Applicant brought the car to the Respondent's mechanic for an inspection and paid half the cost of the replacement engine. The Applicant advised that the vehicle had been moved to the Volkswagen service centre at Kippa Ring for retesting and would not be relocated until the KM Diesel invoice was paid. The Applicant also advised Mr Kenny that he had become aware that the vehicle was not roadworthy due to the DPF/EGR emission control system having been removed. The parties reached an impasse.
• [24] The Applicant received an email from Keystar Volkswagen, Kippa Ring dated 15 February 2023 (forwarded by the Applicant to Mr Kenny on or around 16 February 2023) advising the outcome of their inspection as follows:

We removed the cylinder head as recommended, upon removal we have found the head gasket blown between cylinders #3 & #4, this has also caused damage to the cylinder head (blown out chunk between the cylinders) and has damaged the block surface and engine block surface. We also found valves have hit and engine timing out, so unsure on the full story on this engine and the work that has been done to it prior to the current failure. Our recommendation is a new or second-hand engine. Also, whilst working on the vehicle we have noticed vehicle has had its EGR and DPF removed/deleted, to do this means the car also likely has a chip tuned engine ECU.

• [25] The Keystar Volkswagen email also included quotes for a new engine ($17,399.25), a second-hand engine ($15,400.00) and DPF/EGR system and engine ECU assembly ($8,804.40).
• [26] Ms Knight stated that she and the Applicant were driving through an 80 kilometre/hour roadwork zone near Aussie World on the Bruce Highway when about a minute before the vehicle stopped the computer system went haywire sending random gear change signals. They steered the car to the roadside and instantly everything stopped.
• [27] Mr Kenny maintains that he has always been prepared to replace the engine and DPF/EGR system with second-hand parts, and that it is unreasonable the Respondent be required to pay for new parts for a second-hand vehicle with mileage of over 250,000 kilometres. Mr Kenny states that he requested the Applicant on 4 or 5 occasions to return the vehicle to the Respondent's mechanic for inspection, however the Applicant declined.
• [28] The Applicant maintains that the vehicle requires a new engine installed by Volkswagen as a second-hand engine will not be covered by warranty. The Applicant also states that when he contacted the Respondent's mechanic after the engine breakdown, the mechanic did not want anything to do with the problem, which is why he took the vehicle to Volkswagen, Kippa Ring. In December 2024, the vehicle was towed from Volkswagen, Kippa Ring to the Applicant's home at Deception Bay where it has remained under a cover in the carport with various stored parts in the tray and cabin of the vehicle. The Applicant states that if he had known the vehicle was unroadworthy, he would never have purchased it.

• [29] Mr Haigh's assessment report identifies the vehicle's defects, as follows:
  • Cylinder head failure causing complete engine failure.
  • Emissions systems have been removed from vehicle. Unroadworthy.
• [30] Mr Haigh's assessment report identifies the likely cause of the defects, as follows:
  • Cylinder head and gasket failure most likely caused by motor being overheated and gasket failing, overheating not being repaired straight away caused further damage to the cylinder heading causing it to crack and fail.
  • Emission system removed by previous parties, possibly due to failure/fault with system or performance upgrade, deeming vehicle unfit for road use. Note: emission system may have been disabled due to EGR fault causing engine overheating concerns, that may have led to engine cylinder head and head gasket failure unable to confirm without old emission system parts.
• [31] Mr Haigh's assessment report comments on the likelihood of the defects being present at the date of purchase, as follows:
  • Extent of damage to cylinder head the engine this fault would have been present for an extended period before major failure.
  • Emission system would have been removed before sale of vehicle as works on emission system look to be not current.
• [32] Mr Haigh's assessment report comments on the repairs required to the vehicle, as follows:
  • Engine will require replacement and attaching parts as in turbos and fuel system will need to be checked for serviceability. Depending on parts availability engine replacement can be carried out within a week.
  • Emissions system will need to be reinstalled onto vehicle and engine computer will need to be reprogrammed or replaced vehicle will need to be tested by Volkswagen to confirm systems are operating to manufacturer specifications.
• [33] At hearing, I examined Mr Haigh referencing his assessment report and related observations. I then permitted the Applicant's partner and Mr Kenny to examine Mr Haigh. The following is my summary of Mr Haigh's oral evidence:

(a) Mr Haigh confirmed that he inspected the vehicle on 17 October 2023, not on 26 April 2023 as incorrectly indicated in the assessment report.

(b) Mr Haigh does not know whether the engine problem was pre-existing before purchase. The emissions system having been blocked off, the vehicle was not operating as designed by the manufacturer in that the cylinder temperatures would have been higher and other systems would have been reading incorrectly, contributing to the engine failure.

(c) A roadworthy certificate should not have been issued with the emissions system blocked off.

(d) The emissions system includes a gas recirculation valve that puts gases back into the engine to be reburned so they're cleaner coming out of the exhaust. The DPS system catches the soot and burns it off at a higher temperature, so it doesn't pollute. These systems are interconnected with the engine, so when the emissions system is removed or blocked off, the engine receives the wrong signals, and it can inject more fuel at the wrong time and raise the cylinder temperatures resulting in valve and head gasket failures and burnt pistons, having a direct impact on the engine failure.

(e) The vehicle's emissions system was blocked off, not removed, because the passages were closed. This definitely happened before the sale of the vehicle, perhaps even before it was bought by the wholesaler. Mr Haigh could see that the work done was old work, it had carboned up, and there were no fresh tool marks.

(f) There are several reasons why an emissions system is removed or blocked off. The system's valves and coolers are very expensive. When they fail, they can cause engine damage, so sometimes they're removed as a preventative measure, however if not done correctly, it can cause problems. Removal is also motivated by a mistaken belief that it increases the vehicle's power. It is illegal to remove or modify emissions systems in Australia except in the case of farm vehicles.

(g) The vehicle requires a total engine replacement rather than an overhaul due to the damage done to the cylinder block and head. A replacement engine is more cost-effective; an overhaul involves stripping down the engine, replacing all associated non-serviceable parts, and rebuilding.

(h) The replacement engine could be second-hand if a suitable one is available. The downside is that the service history of a second-hand engine is unknown, and it can't be tested until it is installed in the vehicle. It is possible to go through two or three second-hand engines before getting a good one. If the replacement is a new engine, Volkswagen is best place to install because they know the vehicle, however any mechanic can do an engine replacement.

(i) The emissions system requires reinstallation, and the ECU computer system must be reprogrammed back to Volkswagen factory settings or replaced. The blanking plates need to be removed and the gaskets replaced; then it all needs to be cleaned and checked for serviceability because when blocked, the exhaust gases can't flow, and carbon sludges up the engine.

(j) This rectification work is very expensive, more so because the vehicle is a Volkswagen. It is possible that the rectification cost would exceed the cost of purchase. The vehicle has been sitting for a couple of years and may require other work. For example, old oil remains in the transmission, the tyres are likely dry rotted and flat spotted, and the battery won't hold a charge. Other parts may also not be serviceable due to being stripped down and stored in the vehicle's tray and cab attracting surface and flush rusting.

(k) Mr Haigh is certain the damage to the cylinder head and block was caused by the engine failure and not rust as a result of the vehicle being out in the weather for 10 months prior to his inspection. It is obvious that the emissions system had been blocked off, the cylinders overheated, and when the gasket blew, a 5 mm chunk blew out between the two cylinders.

(l) There could be signs of this type of engine failure. The vehicle could be idling rough or be low on power, however an unqualified person may attribute this to poor quality fuel. Mr Haigh believes the vehicle would have been overheating when the failure occurred due to extra fuel going in as a result of the emissions system having been blocked off. This would have increased the cylinder temperature, but not the coolant, so it would not have shown up on the dash. The problems encountered on the highway were due to lost compression in the cylinder, the engine running on three cylinders and losing power, and significant variations in the crank speed. The computer system going haywire was the vehicle trying to decipher the engine failure.

• [34] I accept Mr Haigh's evidence.
• [35] I accept both parties' evidence.
• [36] I consider the dispute between the parties is in the most part about the nature and quantum of the legal remedy.
• [37] I find that:

(a) the vehicle's emissions system had been blocked off prior to the Applicant contracting to purchase the vehicle from the Respondent.

(b) the vehicle was unroadworthy at the date the Applicant took delivery of the vehicle.

(c) the blocked-off emissions system contributed significantly, or completely, to the cylinder head failure.

(d) the vehicle's cylinder head failure caused the engine failure.

(e) the Respondent knew or ought to have known at or prior to the Applicant contracting to purchase the vehicle from the Respondent that the vehicle's emissions system had been blocked off.

(f) the Respondent did not make the Applicant aware of the vehicle's blocked-off emissions system at or prior to the Applicant contracting to purchase the vehicle from the Respondent.

(g) the Applicant did not become aware of the vehicle's blocked-off emissions system until he received the Keystone Volkswagen, Kippa Ring inspection report on 15 February 2023.

• [38] I consider that the vehicle was not at the time of purchase/supply fit for the purpose for which motor vehicles are commonly supplied because the vehicle was no longer capable of being driven, and the vehicle was not free from defects. I further consider that a reasonable consumer fully acquainted with the state and condition of the vehicle (including the hidden defect, being the blocked-off emissions system) would not regard the vehicle as being of acceptable quality.
• [39] I find that pursuant to section 54(1) of the ACLQ the Respondent supplied the vehicle to the Applicant in trade or commerce and in so doing was required to comply with a guarantee that the vehicle was of acceptable quality.
• [40] I find that pursuant to section 54(2) of the ACLQ the vehicle was not of acceptable quality and the Respondent therefore failed to comply with the acceptable quality guarantee ('the Respondent's failure to comply').
• [41] I consider that the vehicle would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the Respondent's failure to comply.
• [42] I find that pursuant to section 260 of the ACLQ the Respondent's failure to comply is a major failure. Accordingly, the remedy provided by section 259(2) of the ACLQ is not available to the Applicant.
• [43] I do not consider that the Applicant has at any stage rejected the vehicle. On the contrary, the Applicant has retained control of the vehicle since the breakdown directing it to two locations for inspection and storage and, since December 2024, has regained possession of the vehicle, storing it at his home. Accordingly, the remedy provided by section 259(3) of the ACLQ is not available to the Applicant.
• [44] Based on my earlier findings, I further find it was reasonably foreseeable that the Applicant would suffer loss or damage as a result of the Respondent's failure to comply, and that pursuant to section 259(4) of the ACLQ the Applicant is entitled to recover damages for such loss or damage.
• [45] I consider the Applicant's loss includes the full amount paid for the vehicle ($24,752.00) on the basis that the Respondent's failure to comply resulted in the vehicle being undriveable since 3 September 2022.
• [46] I consider that the Applicant's loss also includes expenses outlaid as a result of the Respondent's failure to comply. The Applicant has produced various invoices/receipts for vehicle towing and inspection costs. I consider the Applicant is entitled to recover the cost of towing the vehicle from Chevallum (the breakdown site) to his home on 3 September 2022 (reference: Clayton's Towing Service receipt dated 3 September 2022: $185.00). I do not consider however that the Applicant is entitled to recover the costs of the mobile mechanic, Littles Automotive, the injector and compression testing by KM Diesel Service and the other towing costs to and from Volkswagen Kippa Ring as the Applicant chose to take these steps rather than return the vehicle to the Respondent, as requested by Mr Kenny.
• [47] My orders will require that the Respondent compensate the Applicant for his loss and that the Applicant enable the return of the vehicle to the Respondent. I consider this a preferable remedy to requiring that the Respondent rectify and/or replace the damaged engine, emissions system and computer system given the risk of further faulty parts and installation and given the extended period since the vehicle has been driven and the related risk of deterioration to parts.

[1] Motor Dealers and Chattel Auctioneers Act 2014 (Qld) sch 1 s 4(2).

[4] Ibid, ss 259(2), 259(3), 261, 262, 263.