Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Ismail v Nissan Motor Co (Australia) Pty Limited & anor [2014] NSWCATCD 189 Decision date: 07 October 2014 Before: B Howe, General Member Decision: 1The respondents are to replace the transmission oil pump and the transmission mountings in the applicant's vehicle in a proper and workmanlike manner before the expiration of four weeks from the date of these orders at no cost to the applicant. 2The balance of the application is dismissed. Catchwords: ACCEPTABLE QUALITY - state of vehicle RENEWAL OF PROCEEDINGS - cost for work not performed - cost to rectify defective work COMPENSATION - diminution of value of vehicle Legislation Cited: Australian Consumer Law (ACL) Consumer & Competition Act 2010 (C'wlth) Fair Trading Act 1987 (NSW) Consumer Claims Act 1998 Motor Dealers Act 1974 Motor Dealers and Repairers Act 2013 Consumer, Trader and Tenancy Tribunal Act 2002 (CTTT Act) Civil and Administrative Tribunal Act 2013 (NCAT Act) Cases Cited: Margery v Cumberland Ford & Ford Motor Company of Australia [2006] NSWCTTT 488 Category: Principal judgment Parties: Mysa Ismail (applicant) Nissan Motor Co (Australia) Pty Limited ("Nissan") Steve Jarmin Motors Pty Limited ("the dealer") File Number(s): MV 13/55950 Publication restriction: Unrestricted reasons for decision Application 1These proceedings were commenced in the Consumer, Trader and Tenancy Tribunal ("CTTT"). The CTTT was abolished on 31 December 2013. The functions of that Tribunal were transferred to the New South Wales Civil and Administrative Tribunal ("NCAT"). The NCAT Act abolished one tribunal and established another. The legislation allowed NCAT to determine proceedings which had yet to be determined by CTTT by applying the legislation under which the CTTT operated. 2For ease of reference when no differentiation is required, either tribunal will be referred to as "the Tribunal" to encompass both the CTTT and NCAT. The purchase of the vehicle 3The Tribunal was informed that the applicant purchased a 2011 model Nissan Pathfinder Ti550 diesel powered motor vehicle from Zeina Itaoui. She had purchased the vehicle in a new condition from the dealer during November 2011. 4During the time of her ownership, the engine had to be replaced once as a result of the use of incorrect fuel, in that petrol was used in the diesel engine and on a second occasion due to problems of the engine "knocking". The history of the claim 5An application was filed with the Tribunal on 28 October 2013 in the name of the applicant's husband, Ahmed Allouche. The application form sought an order for the respondent (at that stage being only Nissan) to provide a motor vehicle to the approximate value of $70,000.00. The reasons for seeking that order were stated to be: "I would like the vehicle replaced for the reason being that the car has already had the engine replaced twice. The engines have both been faulty. I have therefore lost much confidence in the vehicle. This is a family car and it has been in and out of the service workshop for almost 3 months and it still has a faulty engine. The dealer and Nissan Australia said they will replace the motor but I won't accept this. I have lost confident in this car as it is less than 2 years old and it has only proven to be faulty." 6The matter was first heard before Member Ziegler on 18 November 2013 at Sydney. She amended Nissan's title to reflect the correct identity and transferred the proceedings to Hurstville. 7Member Eftimiou, in chambers on 18 November 2013, granted leave to both parties to be legally represented. 8Member McMurran presided at the hearing on 16 January 2014 at Hurstville. He made several interlocutory directions including adding the dealer as a second respondent, amending the applicant's name from that of her husband to the vehicle's owner, and indicating the possibility of a cross application. 9A letter was received on 23 January at the Registry from the applicant's solicitor. It indicated that the solicitor expected to receive instructions to join Zeina Itaoui as a third respondent. This did not occur. The Tribunal has no jurisdiction to entertain a claim about the sale of a motor vehicle between two people. The only claims that may be agitated before the Tribunal concern the operation of the Motor Dealers Act and its successor, the Motor Dealers and Repairers Act. 10The matter was next before me on 18 February 2014. In an attempt to narrow the issues, and perhaps resolve the dispute, I ordered the applicant to file and serve an expert report outlining the problems and complaints about the vehicle. The applicant was to deliver the vehicle to the dealer. The respondents were directed to diagnose whatever faults which were identified by the applicant's expert and compile any reports they intended to rely on. 11When the matter was next before the Tribunal on 5 May 2014, Member Ziegler directed the parties to exchange all documents and adjourned the matter for a formal hearing. The circumstances of the private sale 12Apparently, the applicant's husband had carried out plumbing work for Ms Itaoui's husband to the value of $54,000.00. A receipt tendered to the Tribunal by the applicant demonstrated that on 2 September 2013, the vehicle changed hands for $54,000.00. Ms Itaoui claims that sum had been received by her. 13This sits oddly when the certificate of registration is examined. It demonstrates that on 19 September 2013, when the vehicle owner's details were changed, stamp duty for $900.00 was paid. That would indicate that the value of the vehicle was stated to Roads and Maritime Services to be $30,000.00. 14In his statutory declaration declared on 15 June 2014, Ahmed Allouche declared that just prior to purchasing the vehicle, he spoke to Redwan Allam, the husband of Mrs. Itaoui. Mr Allam represented to the applicant's husband that the vehicle had a new engine as the old one had issues. Mr Redwan told Mr Allouche that the vehicle had been returned to Nissan and the engine had been changed. 15Mr Allouche deposes that he test-drove the vehicle and at the time did not notice "anything out of the ordinary" in the performance of the vehicle. The repairs ordered to be carried out 16On 7 July 2014, the matter returned before me. I made certain orders, including a work order as: "3. By consent of the parties given verbally, the Tribunal orders that the respondent, NISSAN MOTOR CO (AUSTRALIA) PTY LTD is to carry out the following work on or before 15-Aug-2014 in a proper and workmanlike manner at no cost to the applicant. Details of Work order: replace the torque converter repair/replace the drive plate, if required repair/replace the transmission oil pump if required, and repair/replace the transmission mountings if required 4. The Tribunal notes the agreement between the parties, given verbally, that Nissan will take all necessary steps to rectify/remedy the vibration and shudder problems that occur in the vehicle whilst it is in idle and/or when in motion, on or before 15 August 2014." 17The parties agreed that the four items mentioned in the consent order had been identified as creating the vibration and shudder problems complained of and that the progressive replacement of these various parts may rectify the nuisance. 18I was of the view that this work order may have settled the flaws plaguing the vehicle. This would restore it as a fully functional vehicle. That left only the issue of compensation to be determined. So I made the following orders: "The Applicant has leave to amend the claim for compensation by 01-Aug-2014 by sending a copy of the amended claim to the Divisional Registrar and the other parties, and including: A list of each item of compensation claimed, specifying the monetary amount of each claim. A copy of all invoices, quotes, statements and other documents which will be relied upon at the hearing." 19As well, certain directions were made to exchange all evidence about the award of compensation. The proceedings were adjourned for a formal hearing on that question only. The claim for compensation is amended and renewal contemplated 20By letter dated 7 July 2014, the applicant's solicitor amended the claim to seek compensation in the sum of $40,000.00. An extension of time was also sought for filing/serving documents to corroborate the claim for compensation. It was stated that the applicant would be unable to supply the documentation until after the vehicle was attended to by the respondents to complete the work ordered to be carried out. 21In chambers on 30 July 2014, I extended the timetable and issued reasons thus : "The only question left for determination by the Tribunal is that of compensation. The claim for compensation has been set down for hearing on 9 September 2014. The issues for compensation are to be listed in an amended claim, to be filed and served, on or before 1 August 2014. To allow that to happen, the timetable has been varied as above. The Tribunal notes the applicant's lawyer's letter of 7 July 2014, amending the claim for compensation to $40,000-00. The work to be performed pursuant to orders 3 and 4 of 7 July 2014 play no part in the claim for compensation. There is an agreement between the parties for that work to be performed. In the event the work is not performed at all, the applicant may renew that part of these proceedings and seek a money order for that work to be carried out by his repairers. In the event that the work is performed, but the applicant considers that the work has not been performed in a proper and workmanlike manner, the applicant may file a fresh claim concerning any alleged deficiencies about that work." 22From this it can be seen that the applicant and her lawyers were on notice that the forthcoming hearing concerned only compensation. Any issues about the work to be performed would have to be the subject of an application for the renewal of proceedings. 23Section 43 of the CTTT Act sets out that if an order has not been complied with, the person in whose favour the order was made may renew the proceedings to which the order relates by lodging a notice with the Tribunal, within 12 months after the end of the period, stating that the order has not been complied with. 24The determination of the renewed proceedings is usually a straightforward affair. The renewing party tenders quotation(s) for the work to be performed, usually by their preferred repairer, and an order is made for the non-complying party to pay that amount. The hearing 25At the hearing, the applicant relied on two statutory declarations by Ahmed Allouche of 15 June and 4 July 2014, as well as three reports compiled by Phil Scott, dated 18 March, 15 August and 8 September 2014. 26At the start of the hearing, Mr El-Hage stated that his client sought $16,000.00 compensation and a further $14,500.00 for the cost of the work which had either not been carried out, or had not been completed with due skill and care. The claim for $16,000.00 was in sharp contrast to the solicitor's assertion that $40,000.00 was sought for compensation. 27The Tribunal brought to Mr El-Hage's notice that an application to renew proceedings should be made to seek the payment of $14,500.00. In response, Mr El-Hage admonished the Member for placing an administrative barrier in the applicant's way. He demanded the Tribunal immediately enforce the earlier work order. He claimed that his client wished to rely on a report compiled by Phil Scott, a consulting automotive engineer, which had been given to the other parties and the Tribunal on the day of the hearing. 28The respondents initially objected to this report, due to the late service, but eventually offered no resistance to the hearing proceeding forthwith. They claimed they could meet the issues raised in that report. They did not seek to adjourn the proceedings. 29The report of Phil Scott dated 8 September 2014 reads: The subject vehicle is identified as a Nissan Pathfinder Ti 550 4WD with a V6 Turbo Diesel engine and a 7 speed automatic transmission. The vehicle has a driveline vibration that remains of unknown origin. The vehicle was returned to Steve Jarvin Nissan for further attempts to rectify the vibration following the NCAT hearing on Monday 7th July 2014. The vehicle was retained by Steve Jarvin Nissan for an approximate period of five (5) weeks. The vehicle was returned to the applicant after these further repairs. The vehicle was again road tested on Thursday 4th September 2014 from the applicant's premises. The odometer at the start of this road test was noted at 28843 klm. When driven by the owner the vibration was felt in each gear as the engine speed was increased. The vibration was again more noticeable as the load on the engine was increased. I then drove the vehicle at varying engine speed and load on suburban streets and the Hume Highway at Chullora. The vehicle displayed a noticeable vibration at an approximate engine speed of 2500 RPM. It was noted that the vibration began at an approximate engine speed on 2200 RPM and continued until an approximate engine speed on 2800 RPM. The vibration would increase in intensity in relation to both the load applied to, and the speed of, the engine. The vibration in the vehicle during this road test displayed a more defined and harsher characteristic when compared to the previous road test on 6 March 2014. The vibration was able to be maintained when the engine was operated at approximately 2500 RPM and with a light load applied to the engine. The vibration also produced a harmonic vibration frequency that was noticeable as a "drumming or droning" noise effect in the occupant cabin of the vehicle. This type of vibration is intrusive on the occupants of the vehicle and causes headaches and nausea. Harmonic vibrations in a motor vehicle are very destructive to the vehicle itself according to the frequency of the vibration. In this case the vibration is noticeable by the vehicle occupants at an engine speed that is consistent with vehicle cruising speeds. The applicant also reports that since receiving the vehicle back from Steve Jarvin Nissan, the transmission gear change has displayed an occasional engine speed increase during the gear change. This is known as "flaring" and occurs on the up shift when changing gears when the load is being applied to the engine and transmission. This is most commonly caused by either low oil pressure or slipping clutch pack in the transmission. The road test of the vehicle has resulted in the driveline vibration being more prominent and of a harsher frequency. The vibration is now able to be manipulated by applying a slight load with the brake pedal whilst maintaining a light application of engine accelerator. The vibration in the vehicle is now more noticeable than when previously road tested and prior to the attempted repairs carried out by Steve Jarvin Nissan. 30It was the evidence of both Steve Watson, the dealer's general manager, and Joe Ragusa, the dealer's service manager, that the torque converter and the drive plate had been replaced as ordered by the Tribunal. None of the other work had been done, as the order carried the proviso that the work was only to be performed "if necessary". They were of the view that replacing the torque converter and the drive plate eliminated the defect and that no further work was required. 31Both Mr Watson and Mr Raguso testified that diesel engines always produce a vibration due to the manner of combustion of the fuel occurring in a different fashion to petrol driven engines. They stated that all diesel engines vibrated. Both admitted that even after replacing the torque converter and the drive plate, the applicant's vehicle would have had the vibration that is a natural attribute of diesel powered motor vehicles. The Australian Consumer Law guarantees 32From 1 January 2011, the Australian Consumer Law provides that traders are to provide products which must be safe, durable, free from defects, fit for purpose, acceptable in appearance, match its description and match any sample or demonstration model. 33Additionally, the trader will honour any express warranties, while a manufacturer is required to guarantee that the goods will be of acceptable quality and will match their description. The manufacturer has to honour any express or extended warranties and provide repairs or spare parts for a reasonable time. 34ACL is Commonwealth legislation but it applies in New South Wales as local law due to the operation of section 28 of the NSW Fair Trading Act 1987. That section states that the ACL text, in force from time to time, applies as a law of the jurisdiction of New South Wales. It is referred to as the Australian Consumer Law (NSW). 35To successfully pursue an application at the Tribunal, it is necessary for an applicant to have the evidence to prove the claim. It is not sufficient for an applicant to think they have a claim; they have to be able to prove it. This is done by the production of evidence. 36In determining claims at the Tribunal, the onus of proof requires the applicant to convince the Tribunal that the applicant is entitled to the relief sought. This means that the applicant must prove each element of the claim, or cause of action, in order to recover damages or loss. 37If the actions of a trader or supplier of goods or services, or any warranty arising thereto, infringe the ACL, or New South Wales legislation, including the Consumer Claims Act, then the Tribunal may entertain a claim by a consumer. 38The latter Act allows the Tribunal to make orders concerning the payment of money (such as a refund or the cost of rectification, but not both), work to be performed (such as repairs), or that the goods be replaced with similar goods which match the description of the goods required to satisfy the original transaction The "renewal" proceedings 39As set out in [10] above, an attempt was made to have the parties agree about the defects with the vehicle. This resulted in orders being made, with the consent of the parties, on 7 July 2014: see [16] above. 40The respondents claim that the torque converter and the drive plate were replaced, but the transmission oil pump and the transmission mountings were not required to be replaced or repaired. 41Since the replacement of the torque converter and the drive plate, the applicant's expert, Phil Scott, examined the vehicle and his report of that examination is set out in [29] above. Nowhere in that report does Mr Scott indicate that he examined the replaced parts to confirm they were replaced. 42However, Mr Scott has indicated that there is still a problem in that the vehicle exhibits a vibration. 43The Tribunal is of the view that the parties came to an agreement about the various parts of the vehicle which may have needed to be replaced. The torque converter and the drive plate were replaced but the respondents considered that there was no necessity to replace the transmission oil pump or the transmission mountings. 44The applicant sought an order for the payment of $14,500.00, being "the cost of repairs". To substantiate this cost, the applicant relies on an email from Alltec Motor Assessments & Investigations, of 14 August 2014, in which John Vernier writes that "Repair costs estimated $14,375.00 GST inclusive". Mr Vernier does not supply any documentation to substantiate that claim and a search of the documents filed by the applicant fails to reveal any quotation for that amount. 45The Tribunal is of the view that as the parties agreed that there were four parts of the vehicle that may require to be replaced, but only two have been, then the remaining two items should also be replaced. 46Consequently, the "renewal" proceedings will be determined by an order to have the transmission oil pump and the transmission mountings replaced. This would complete the work agreed to by the parties on 7 July to bring the vehicle to operational efficiency. The claim for compensation 47The applicant claims $16,000.00 for compensation. 48On 7 July the Tribunal ordered the applicant to amend the claim for compensation by 1 August and include in the amendment a list of each item of compensation claimed, specifying the monetary amount of each item, and to substantiate each item by the production of the documents relied on. 49The applicant's lawyer wrote to the Tribunal and claimed $40,000.00 in compensation and sought an extension of time to exchange the required documents: see [20] above. 50The extension of time was granted. 51The only documents received by the Tribunal after the extended time were two reports by Phil Scott: one dated 15 August and the dated 8 September fully cited in [29] above. 52The relevant portion of Mr Scott's letter of 15 August reads: This vehicle in the current condition would most probably not be of interest to a private buyer. The prospective purchaser would most probably be either a motor vehicle dealer of a motor vehicle repairer who would be prepared to repair the vehicle and then resell at a profit. Therefore the prospective buyer would need to allow for both an unknown cost margin of approximately 20% and a profit margin of at least 10% - 15% as a minimum. These figures amount to an approximate $12,950:00. It is my opinion that the potential sale price of the subject vehicle in the current condition and with the vehicle history being disclosed to any prospective purchaser would be in the order of approximately $24,000:00. 53In the documents tendered to the Tribunal, the applicant cites Margery v Cumberland Ford & Ford Motor Company of Australia as support for her claim for compensation. Margery can be distinguished as Beverley Margery bought a new car and from the time of taking delivery the vehicle suffered electrical problems. The Tribunal was, on that occasion, comfortable to conclude that Ms Margery had been sold a "lemon". 54The gist of Margery according to the Tribunal Member was not for breach of statutory or express warranty obligations, but rather it was a claim for a vehicle that was not in a fit and merchantable quality when first supplied. 55According to a conversation deposed to by Mr Allouche, Mrs Itaoui's husband said that the engine had been replaced. In fact, it had been replaced twice: once because of the use of incorrect fuel, and on the second occasion because of "knocking". Mr Allouche testified that when the vehicle was sold to his wife, it had no problems. 56There has been no evidence produced by the applicant detailing the history of the vehicle deposed to by either Mrs Itaoui or Mr Redwan. It appears to the Tribunal that lack of evidence points to a history of a vehicle which was of acceptable quality under ACL. 57The claim for compensation appears to be based on an alleged diminution of value of the vehicle. Several valuations were tendered. The authors of these valuations are engaged in the motor industry. Some have given an opinion about the value of the vehicle without any inspection, merely relying on a description of the state of the vehicle. 58There was no evidence by the applicant herself about the value of the vehicle. All of the valuations are based on a "market" value. The Tribunal is of the view that the real value was stated by the applicant when she notified governmental authorities to have the ownership of the vehicle changed from Ms Itaoui. 59Any of the parties to the proceedings could have issued a summons for production to the Roads and Maritime Services. This would have elicited information about the declaration by the applicant as to the value of the vehicle when it changed hands. 60The Tribunal notes that value was stated before any repairs had been carried out. It may be that any potential purchaser of the vehicle would be confident that once all the repairs ordered by the Tribunal have been carried out, that the value of the vehicle has appreciated, rather than depreciated. 61The Tribunal is not satisfied that the applicant has made out a case that the vehicle has an inherent manufacturing defect, or that the dealer has not fulfilled the obligation of repairing any defects under warranty. 62The Tribunal has had difficulty calculating the compensation sought. Even if the respondents were liable to pay compensation (and the Tribunal is not of that view) then the amount of compensation which could be ordered to be paid cannot be calculated with any precision. B Howe General Member Civil and Administrative Tribunal of New South Wales 7 October 2014 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: 10 December 2014