Lesniewicz v Tony Azzi (Automobiles) Pty Ltd t/as Larke Hoskins Honda Homebush [2014] NSWCATCD 37

Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Lesniewicz v Tony Azzi (Automobiles) Pty Ltd t/as Larke Hoskins Honda Homebush [2014] NSWCATCD 37 Hearing dates: 14 January 2014 Decision date: 26 March 2014 Jurisdiction: Consumer and Commercial Division Before: F Holles, General Member Decision: 1. The first respondent Tony Azzi Automobiles Pty Ltd t/as Larke Hoskins Honda Homebush is to pay the applicants Adam and Kirsty Lesniewicz the sum of $26,990.00 on or before 4 April 2014. 2. The second respondent National Warranty Company Pty Ltd is to pay the applicants Adam and Kirsty Lesniewicz the sum of $2,240.00 on or before 4 April 2014. Legislation Cited: Civil And Administrative Tribunal Act 2013 No2 [NSW] Consumer Claims Act [NSW] 1998 Australian Consumer Law Motor Dealers Act [NSW] 1974 Fair Trading Act [NSW] 1988 Cases Cited: Griffin v Duggan v [2014] NSWCATAP5 Burton v Chad Pty Ltd Limited [2013] NSWDC Category: Principal judgment Parties: Adam Lesniewicz and Kirsty Lesniewicz (applicants) Tony Azzi (Automobiles) Pty Ltd t/as Larke Hoskins Honda Homebush (first respondent) National Warranty Company Pty Ltd (second respondent) File Number(s): MV 13/59455

reasons for decision 1This matter was heard on 14 January 2014. The applicants appeared in person. The first respondent did not appear. Mr Shane Jackson represented the second respondent. The second respondent appeared by telephone. 2The matter involves a claim in relation to the purchase of a second hand car.The claim was lodged with the NSW CTTT, whose role and functions were subsumed by the NSW Civil and Administrative Tribunal [NCAT] on the first of January 2014. [See Schedule 1 NCAT ACT] 3The savings and transitional provisions of the NCAT legislation provide for the transfer of matters from the CTTT to the NCAT [ See s 7 and 8 of Schedule 1][See Griffin v Duggan [2014] CATAP5] 4The provisions of the Consumer Claims Act define a consumer claim as well as persons presumed to be consumers, and that the NCAT has jurisdiction under the Consumer Claims Act. 5I find that I have jurisdiction to hear the matter. 6The applicants purchased a second hand motor vehicle from the first respondent on 18 August 2012. The purchase price was $26,990.00. Included in the same contract for purchase was a "5 Year Warranty" sold by the first respondent on behalf of the second respondent. The cost was $2,800.00 7The vehicle was a 2006 model Subaru Liberty, with a 1/07 compliance plate, and presumably first registered in 2007. The vehicle came with a Form 4 under the Motor Dealers Act, which provides a warranty for three months or 5000 km for the vehicle. The vehicle as sold, complied with the requirements for a Form 4 warranty. 8The vehicle broke down within seven days and was returned to the first respondent who arranged repairs to the vehicle and then returned it to the applicants. 9I note that only the second named applicant purchased the vehicle but both applicants assert ownership of the vehicle. 10The vehicle next broke down on 4 April 2013 and the vehicle was taken to a John Moriaty Automotive Services. Mr Moriaty, a licensed Mechanical Engineer, provided a number of quotations and opinions all of which were unchallenged and all of which assert that the repairs carried out in 2012, by the first respondent were faulty and resulted in the further breakdown. 11The vehicle has remained at the repairers since then, and extensive attempts by the applicants to resolve the matter proved unsuccessful. The application to the CTTT was lodged on 2 November 2013 12The matter was first listed in December 2013; the second respondent sought and obtained an adjournment. As mentioned earlier, the first respondent did not appear on hearing. I am satisfied that the first respondent was advised of the hearing and was, or ought to have been, aware of the time and place the matter was to be heard. 13On hearing, the applicant and second respondent both gave evidence as to the position they took. The second respondent did not provide any documents in support of its position. In summary, the second respondent offered to replace the engine with another second hand engine. 14The applicants in their application asked for a refund of the purchase price including the warranty purchase. 15The recent decision of the NSW District Court, considering an appeal from the CTTT, held that even in "no warranty" transactions under the Motor Dealers Act , The Australian Consumer Law still applied [Burton v Chad Pty Ltd NSWDC 1Nov13]. 16Clearly this present matter falls within the ambit of that decision. I find that the vehicle was either faulty or had a latent defect caused by the negligence of the first respondent or its contracted repairers; for the period up to the time it failed in April 2013. 17The provisions of the Australian Consumer Law apply in NSW by virtue of the provisions of its adoption in s 28 of the Fair Trading Act[NSW] 1987. 18Section 54 of the Australian Consumer Law sets out the rights and responsibilities of a purchaser . Section 54 [2] requires goods to be free of defects. 19The first respondent notified no faults in the vehicle relevant to these considerations to the applicants. 20The goods were faulty as delivered, and that faulty state was not rectified by the first respondent when brought to its notice, in August 2012. 21I find that the goods as supplied were not of acceptable quality. And that s 54[4] of the ACL has no application in that the consumer was not aware of any defect latent or otherwise. 22I find that there was a continuing breach of the requirement to supply goods of acceptable quality and that the first respondent has not sought to remedy the defect. The first respondent seems to rely on the third party warranty it sold, to indemnify itself against any claim. 23Clearly the first and second respondents are not at arm's length in the initial purchase transaction, at the very least, the first respondent took the payment for the warranty as part of the purchase price of the vehicle. The applicants claim that the first respondent claimed the cost of the first repairs against the warranty agreement without the consent of the first applicants. There is no evidence to dispute this assertion. 24I note that there is no legal principle, which requires the applicants to invoke the warranty. The purchase of the warranty does not extinguish any right of claim against the first respondent 25The applicants seek compensation for the breach in the form of a refund of both the purchase price and the cost of the warranty. 26As indicated earlier, the second respondent offered to replace the faulty engine with a 2006 second hand engine. 27Commensurate with the matters referred to in s 13 of the Consumer Claims Act as to the matters to be taken into consideration when making orders, and especially the requirement to be "fair and equitable" (s 13 [1]) I have reached the conclusion that the only fair and equitable order so far as the applicants and the first respondents is concerned is to require the refund of the purchase price. I have taken into account the fact that the applicants had the use of the vehicle for approximately six months on late 2012/early 2013, however during all that time, as I understand Mr Moriaty's unchallenged report the first repairs would have failed, it was simply a question of when that would happen. 28So far as the second respondent is concerned, the practical effect of the order to be made against the first respondent is to relieve them of any potential financial responsibility for a claim against the warranty. I note that the cost of a replacement engine was estimated by Mr Moriaty to be some thousands of dollars more that the cost to the applicants of the warranty purchase. So far as I understand the evidence, there has been no claim made against the second respondent by the applicants, which resulted in a payout to the applicants or the payment of the cost of any repairs for the applicants for the subject vehicle. 29That said, they have had a continuing legal liability to adhere to the terms of the warranty from August 2012 until the vehicle succumbed to its second engine failure in April 2013. A period of some eight months out of the 60-month warranty guarantee. being approximately 85% of the total period of the guarantee. 30I accept that there would have been some initial administration costs to the second respondent. I also accept that they were not responsible for the supply of the faulty vehicle, and I have no evidence before me of the nature of the commercial ties between the first and second respondent, 31In those circumstances, I have determined that again in accordance with s 13 of the Consumer Claims Act, that a fair and equitable refund by the second respondent to the applicants is 80% of the payment to the second respondent, by the applicants. That is $2,240.00.