Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Fries v PPT Investments Pty Limited [2022] NSWCATCD 134 Hearing dates: 30 May 2022 Date of orders: 16 August 2022 Decision date: 16 August 2022 Jurisdiction: Consumer and Commercial Division Before: S Hanstein, General Member Decision: The application is dismissed. Catchwords: CONSUMER LAW — Consumer guarantees — Supply of goods — Guarantee as to acceptable quality — Guarantee as to fitness for purpose — Motor vehicle — Whether vehicle of acceptable quality— Whether vehicle fit for purpose CONSUMER LAW — Consumer guarantees — Supply of services — Guarantee as to due care and skill — Motor vehicle — Whether repairs done with due care and skill Legislation Cited: Australian Consumer Law (NSW) Cases Cited: Safi v Heartland Motors Pty Ltd t/as Heartland Chrysler [2016] NSWCATAP 80; Hueter v Learn To Trade Pty Limited [2018] NSWCATCD 71 Category: Principal judgment Parties: Udo Fries (Applicant) PPT Investments Pty Limited (First respondent) Silvermate Pty Limited (Second respondent) Representation: Roberts Legal (Applicant) B Heuchan (First respondent) P Hartley and C Eschler (Second respondent) File Number(s): MV22/03549 Publication restriction: Nil REASONS FOR DECISION 1. The applicant purchased a new motor vehicle from the first respondent, and had servicing and maintenance on the vehicle carried out by the second respondent. The applicant seeks an order that the respondents pay to him the sum of $21,000 for loss suffered by him as a result of the respondents' failure to comply with consumer guarantees under the Australian Consumer Law (NSW) ("ACL (NSW)"). Relevant Law 1. Section 54 of the ACL (NSW) provides, relevantly: 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) … (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. ... 1. Section 55 of the ACL (NSW) provides, relevantly: 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. 1. Section 60 of the ACL (NSW) provides: 60 Guarantee as to due care and skill If a person supplies, in trade or commerce, services to a consumer, there is a guarantee that the services will be rendered with due care and skill. 1. Section 61 of the ACL (NSW) provides: 61 Guarantees as to fitness for a particular purpose etc. (1) If: (a) a person (the supplier) supplies, in trade or commerce, services to a consumer; and (b) the consumer, expressly or by implication, makes known to the supplier any particular purpose for which the services are being acquired by the consumer; there is a guarantee that the services, and any product resulting from the services, will be reasonably fit for that purpose. (2) If: (a) a person (the supplier) supplies, in trade or commerce, services to a consumer; and (b) 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 services were conducted or made; the result that the consumer wishes the services to achieve; there is a guarantee that the services, and any product resulting from the services, will be of such a nature, and quality, state or condition, that they might reasonably be expected to achieve that result. (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. (4) This section does not apply to a supply of services of a professional nature by a qualified architect or engineer. 1. Section 259 of the ACL (NSW) provides, relevantly: 259 Action against suppliers of goods (1) A consumer may take action under this section if: (a) a person (the supplier) supplies, in trade or commerce, goods to the consumer; and (b) a guarantee that applies to the supply under Subdivision A of Division 1 of Part 3-2 (other than sections 58 and 59(1)) is not complied with. (2) ... (3) If the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may: (a) … (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. ... 1. Section 260 of the ACL (NSW) provides, relevantly: 260 When a failure to comply with a guarantee is a major failure A failure to comply with a guarantee referred to in section 259(1)(b) that applies to a supply of goods is a major failure if: (a) the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or (b) … (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. 1. Section 267 of the ACL (NSW) provides, relevantly: 267 Action against suppliers of services (1) A consumer may take action under this section if: (a) a person (the supplier) supplies, in trade or commerce, services to the consumer; and (b) a guarantee that applies to the supply under Subdivision B of Division 1 of Part 3-2 is not complied with; and … (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. … Applicant's case 1. The applicant's evidence and submissions included the following. 2. In March 2017, the applicant purchased a new Volkswagen Amarok motor vehicle ("Vehicle") from the first respondent at a price of $68,900. 3. On 16 February 2019, the Vehicle would not start. Eventually, on about the tenth attempt, the applicant was able to start the Vehicle. 4. On 18 February 2019, the Vehicle began losing power whilst being driven. The applicant parked the Vehicle and Volkswagen Roadside Assistance attended, noted fault code P061400, reset the fault log and recommended the applicant consult with the closest dealership. The applicant then drove the remaining 180km home without further issue. 5. On 8 March 2019, the applicant took the Vehicle to the second respondent for its annual service and requested that the fault code from 18 February 2019 be investigated and the issue rectified. The second respondent was not able to find any fault with the Vehicle and simply told the applicant to monitor the issue. 6. On 23 April 2019, whilst the applicant was driving the Vehicle, the Vehicle entered "auto stop" mode when stationary, but would then not restart. Volkswagen Roadside Assistance attended, was able to restart the Vehicle and said the issue was related to the engine. 7. The applicant took the Vehicle to the first respondent the following day, who inspected the Vehicle and diagnosed that the starter motor had to be replaced. This work was completed under warranty and the Vehicle was returned to the applicant on 31 May 2019. 8. The Vehicle continued to have issues with not starting when required. It also appeared to the applicant that the transmission function in the reverse mode was compromised by the high ratio of the reverse gear. There was difficulty reversing up hill on an angle. In a straight line, it was not so bad. 9. The applicant requested the second respondent to investigate these issues when carrying out the annual service in March 2020. The second respondent could not find a problem with the Vehicle then, or in May 2020 when an employee of the second respondent travelled with the applicant in the Vehicle in an attempt to replicate the issues. 10. The applicant reported the issues with the Vehicle to the first respondent and again to the second respondent, and also to Volkswagen Australia. He was informed by the Volkswagen Customer Service team that the concerns he was having were part of the design of the Vehicle. 11. On 5 August 2020, the applicant used the Vehicle as a trade-in against the purchase of a new Toyota vehicle, with an allowance for the trade-in of $40,000. He was tired of the uncertainty with the Vehicle and the lack of assistance provided by the respondents and Volkswagen Australia. 12. A Red Book valuation for a vehicle of this type, with 45,000km in "very good" condition, indicates, as at 5 August 2020, a value of $47,680 at private sale and $41,330 as a trade-in; and a current value of $59,990. The Vehicle had extras worth at least $4,000 to $5,000, so would have obtained a higher trade-in value than recorded in that the Red Book valuation. 13. The Vehicle was not of acceptable quality because it was not as free from defects, safe and durable as a reasonable consumer, fully acquainted with the state and condition of the goods, would regard as reasonable, noting it was a new vehicle for which the applicant paid $68,900. A reasonable consumer would expect a vehicle such as this would last more than two years before needing to have the starter motor replaced. The significant issues with the vehicle meant it was not safe or durable. It was also not fit for the disclosed purpose of towing the applicant's caravan. The issues with the Vehicle were not rectified by the respondents in a reasonable time and consequently the applicant had to use the Vehicle as a trade-in at a less than fair value. 14. The respondents should have informed him that the Vehicle had a potential issue in relation to the starting motor. 15. The second respondent failed to render services with due care and skill because it failed to identify any defects in the Vehicle, failed to make inquiries of the Roadside Assistance service to find out what the fault code that was present on 18 February 2019 meant, and failed to make the Vehicle safe to use and fit for purpose. 16. The applicant and any reasonable consumer would not have purchased the vehicle or acquired the services if he knew it was not safe or durable and could not be made so within a reasonable time. 17. The applicant claims $21,000 as the reduction in value of the Vehicle below the price paid for the Vehicle. If the applicant had not had to trade-in the Vehicle and still had it, it would be worth more today. First respondent's case 1. The first respondent denies the claim by the applicant. Its evidence and submissions included the following. 2. In April or May 2019, the first respondent diagnosed the issue with the starter motor. The starter motor was replaced under warranty, and returned to the applicant on 31 May 2019. The applicant was provided with a loan car in the interim. The first respondent has not seen the Vehicle since that time. No issues were raised with either respondent after the replacement of the starter motor until the applicant attended the second respondent for the annual service in March 2020. 3. It is not unusual for a new vehicle to have an issue, and that is why warranties are provided. The requirement for the starter motor in the Vehicle to be replaced within the first two years, which was done under warranty, does not mean the Vehicle was not of acceptable quality. 4. If contact were made by the applicant, it is likely the first respondent referred the applicant to Volkswagen Australia. Unless a vehicle is presented for inspection, there is no way the first respondent could know there was any fault with the Vehicle. 5. It sometimes happens that there is a problem with a Vehicle and the first respondent will sometime buy back a Vehicle if there is an issue. 6. The trade-in value obtained for the Vehicle in August 2020 was a fair and reasonable trade-in value. There is no indication on the contract with Toyota that there was anything wrong with the trade-in Vehicle. The starter motor issue does not appear to have had any impact on the trade-in price. 7. The respondents were not aware at the time of an issue with starter motors in this type of vehicle. Second respondent's case 1. The second respondent also denies the claim by the applicant. Its evidence and submissions included the following. 2. The Vehicle was presented to the second respondent on two occasions with a starting issue and towing in reverse issue. On neither occasion could the Vehicle be faulted, including when a road test was undertaken with an employee travelling with the applicant. No fault codes were present. Unless a fault can be observed, there is nothing they can do to fix it. The second respondent did all it could for the applicant, including work without charge in trying to replicate the fault. Consideration 1. I am satisfied this is a consumer claim and the Tribunal has jurisdiction to hear and determine it. Case against the first respondent Need for replacement of the starter motor 1. I am not satisfied, on the balance of probabilities, that the Vehicle was not of acceptable quality within the meaning of section 54 of the ACL (NSW). I accept the submission of the first respondent that a reasonable consumer would expect that motor vehicles, even new ones, being complicated pieces of machinery, can have issues from time to time. Here, once the starting issues were raised with the first respondent in April 2019, it identified the need for a starter motor replacement, and carried out that work under warranty (at no cost to the applicant). It took some time for the replacement starter motor to be obtained, but the applicant was provided with a loan car in the interim. I am not satisfied on the basis that the starter motor needed replacement within two years of purchase, that a reasonable consumer would consider the Vehicle not to be of acceptable quality. 2. If I am wrong about that, I am not satisfied that the failure to be of acceptable quality was a major failure within the meaning of section 260 of the ACL (NSW). As noted by the Appeal Panel in Safi v Heartland Motors Pty Ltd t/as Heartland Chrysler [2016] NSWCATAP 80 at [101]: 1. A "reasonable consumer" would expect teething problems, even in a new vehicle; 2. 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 3. 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. 1. Here, as noted above, the repair was carried out in a relatively timely manner, at no cost to the applicant and he was provided with a loan vehicle. The Vehicle was not returned to the first respondent after that with any further starting issues, or indeed any issues at all. Other issues 1. To the extent that the applicant claims there was an issue with the Vehicle towing in reverse, and further issues with the Vehicle starting after the replacement of the starter motor, I am not satisfied that the applicant has established, on the balance of probabilities, that these issues result in the Vehicle not being of acceptable quality for the following reasons. 2. Apart from the assertion by the applicant, there is no evidence that these issues existed. The applicant has not provided any expert evidence in support of his case, the second respondent was not able to replicate these issues, and the trade-in price obtained by the applicant for the Vehicle is inconsistent with there being significant issues with the Vehicle. It is noted that the Vehicle was not returned to the first respondent for investigation of these issues, nor was any claim brought against the first respondent in respect of these issues prior to the applicant disposing of the Vehicle. Fit for purpose 1. I am also not satisfied, on the balance of probabilities, that there was a failure to comply with the consumer guarantee that the Vehicle be fit for a disclosed purpose, within section 55 of the ACL (NSW). As set out above, the applicant has not provided any expert evidence to establish that the Vehicle could not tow the applicant's caravan and the second respondent did not find any fault with the Vehicle that would lead to that conclusion. Loss or damage 1. Further, I am not satisfied, on the balance of probabilities, that the applicant had to sell the Vehicle at below its value. The evidence does not establish what the value of the Vehicle would have been, as at 5 August 2020, if it did not have the issues claimed by the applicant. The applicant contends that it would have been up to $8,000 more than the Red Book valuation because he had extra accessories, some of which were fitted on the Vehicle when it was purchased by the applicant, and some fitted subsequently. There is no evidence before me as to what the value of those accessories was, if anything, when the Vehicle was traded in in August 2020. The trade-in allowance received by the applicant was not dissimilar to what the Red Book valuation provides for this vehicle, with 45,000km in "very good" condition. There is no evidence, apart from an assertion by the applicant, that the Vehicle was in very good condition. Although the applicant states he informed the Toyota dealer of the issues with the Vehicle, there is nothing on the Toyota sales contract (where the trade-in of the Vehicle is recorded) indicating any issue with the Vehicle. It is unlikely, in my view, that a trade-in allowance only slightly below what would otherwise be expected for a vehicle like this would be paid for a vehicle with potentially significant issues. 2. It should not be taken into account, in my view, when assessing any loss or damage suffered by the applicant (should that be established) that the Vehicle may be of a higher value now than when traded-in by the Applicant. As the second respondent pointed out, the vehicle the applicant was able to purchase using the Vehicle as a trade-in, may also have increased in value. 3. I am also not satisfied that it was reasonably foreseeable that, as a result of the Vehicle not complying with a consumer guarantee, the applicant would have to sell the Vehicle below value (if that were established). The usual course would be for a consumer to return a vehicle to the supplier for repairs, or possibly for a refund or some compensation. If an issue could not be satisfactorily resolved, then a consumer might pursue a claim against the supplier. Here, the Vehicle was not returned to the first respondent after the work was carried out in May 2019. Instead the applicant has disposed of the Vehicle some 15 months later. I am not satisfied that, in those circumstances, it was reasonably foreseeable the applicant would suffer loss in having to sell the Vehicle below value. Case against the second respondent 1. Whether section 60 of the ACL (NSW) has been breached requires an objective assessment of whether the services provided were provided with reasonable care and skill, taking into account all relevant circumstances, including the type of services to be provided and the price of the services (Hueter v Learn To Trade Pty Limited [2018] NSWCATCD 71 at [86]). 2. I am not satisfied, on the balance of probabilities, that the second respondent failed to render the services with due care and skill, or failed to provide services that were fit for purpose, because of the following reasons. 1. The second respondent took steps to investigate the issues raised by the applicant but was not able to replicate the faults and did not have the assistance of any fault codes present in the Vehicle's computer. The applicant has not established that, in those circumstances, the second respondent should nevertheless have been able to repair the Vehicle to rectify the issues raised. The applicant has not provided any expert evidence. 2. The applicant claimed that the second respondent should have informed him of starting motor issues with these vehicles, but his evidence was that he was informed by an employee of a second respondent that there were issues with some starter motors but that was not the case with the Vehicle. In the absence of evidence establishing what was the cause of any starting problem in the Vehicle was, I am not satisfied that this statement by the employee establishes the services were not provided with due care and skill. 3. It was contended by the applicant that the second respondent failed to render services with due care and skill because it failed to make inquiries of the Roadside Assistance service to find out what the fault code that was present on 18 February 2019 meant. Both respondents deny this would be a reasonable step in the circumstances, and the applicant has not provided any evidence to establish that would be a usual or reasonable step for a repairer to take. On the evidence before me, I am not prepared to find this was a failure to provide services with due care and skill. 1. Even if it were established that there was a failure to comply with the consumer guarantees, I am not satisfied that the applicant has established that he has suffered any loss or damage as a result, for the following reasons. 1. The applicant has not suffered any loss or damage from any failure on the part of the second respondent (if that were in fact established) prior to the replacement of the starter motor in May 2019. That is because any issue with that starter motor was fixed at no cost to the applicant in May 2019. 2. The second respondent did not charge the applicant for much (or perhaps all) of the work done after that in trying to replicate the reported faults. 3. It was not reasonably foreseeable that the applicant would have to sell the Vehicle below value (if that were established) as a result of the second respondent not providing these services with due care and skill. In the usual course, it would be expected a consumer would have the necessary repairs carried out elsewhere and may seek to recover the costs in doing so. Order 1. It follows that 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 Amendments 28 September 2023 - Formatting amendments. 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: 28 September 2023