Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Gregory Arthur Burton v Chad One Pty Ltd t/as Crystal Cars [2014] NSWCATCD 191 Hearing dates: 7 July 2014 Decision date: 07 October 2014 Before: J McMillan, General Member Decision: 1The application is dismissed. Catchwords: None Legislation Cited: Australian Consumer Law Cases Cited: None Texts Cited: None Category: Principal judgment Parties: Gregory Arthur Burton (applicant) Chad One Pty Ltd (respondent) File Number(s): MV 13/65624 reasons for decision 1This is a rehearing of a matter that was determined by the Consumer Trader and Tenancy Tribunal on 6 June 2013. The Tribunal on that occasion dismissed the application. The applicant appealed the decision to the District Court. His appeal was upheld, the Court finding that the Tribunal had failed to take into consideration each of the elements in section 54(3) of the Australian Consumer Law The matter was returned to the Consumer Trader and Tenancy Tribunal for hearing. Pursuant to Clause 7 of Schedule 7(i) of the Civil and Administrative Tribunal Act the matter is heard and determined by the New South Wales Civil and Administrative Tribunal. 2The matter came before the Tribunal on 20 February 2014 and orders were made for the parties to file and serve documents intended to be relied upon at the hearing. Documents were filed and served and were tendered to the Tribunal. 3The applicant lodged an application with the Tribunal on 26 February 2013 seeking orders that he be paid the sum of $7,000.00. He had purchased a Nissan Patrol four wheel drive wagon from the respondent on 24 October 2012. The purchase price on the contract of sale, dated 19 October 2012, was $16,990. Included in the terms and condition of the sale was a three year warranty provided at no charge to the applicant. The warranty was with National Warranty Company. The vehicle was sold under Form 8 of the Motor Dealers Act 1974. 4The applicant tendered an affidavit to the Tribunal. In he stated, inter alia, he "test drove the vehicle; he "knew" that diesel engines had the capacity to do around 500,000 kms or more; he understood that there was no warranty attached to the vehicle stating the "Dealer gave me the warranty for free; I would never had expected it to break down after only three months." 5The respondent is a licensed motor dealer in New South Wales and the vehicle was sold under Form 8 of the Motor Dealers Act 1974. Vehicles sold under Form 8 do not attract a warranty under the provisions of the Motor Dealers Act 1974 and Part 4 of that form states; "THERE IS NO WARRANTY UNDER THE MOTOR DEALERS ACT1974 FOR THIS VEHICLE. ACCORDINGLY THE DEALER IS NOT REQUIRED BY THE ACT TO REPIR OR MAKE GOOD ANY DEFECT WHICH MAY EXIST OR OCCUR IN THIS VEHICLE." 6The Form shows a sale date of 24 October 2012 and the odometer reading was shown as 250,816 kilometres. 7The applicant was driving the vehicle in the vicinity of Bathurst on 28 January 2013. He noticed the engine was getting hot and pulled over straightaway. He checked the belts on the engine and they were "fine''. He waited till the engine cooled down and then drove it about a kilometre to a motel where he stayed that night. The following morning he checked the water level and found and started the engine. He allowed it to warm up while the vehicle was stationary and then drove it a mechanic. The vehicle was taken to Johnson's Towing and Mechanical Pty Ltd at Kelso. 8On or about 30 January 2013 the applicant contacted the respondent who advised him to have the vehicle brought to the applicant's residence in Sydney where the respondent would assist him in making a claim on the extended warranty. The applicant declined to do this. 9The engine was partly dismantled by Johnson's Towing and Mechanical Pty Ltd at Kelso. They removed the head of the engine and found severe cracking to the head. Water damage to the No 4 cylinder was also found. The air conditioner compressor was also found to be seized and the belt that drives it was broken. The vehicle has a dual mass flywheel and it was warped. The estimate to rectify the faults was $15,000.00. 10The applicant relies on a document prepared by ARA reconditioning. The document is dated 14 April 2014 and is signed by ARA Kelleyan, workshop manager. The author states that he is a "full tradesman/machinist qualified to fully recondition diesel/petrol engines and have over 11 years working experience." 11The document discloses that the applicant's vehicle was towed to the workshop on or about 28 March 2013. The engine was aid to be overheating and throwing water out of the overflow bottle. At that time the cylinder head had been removed. The document states that "We stripped and inspected the cylinder head and found the cylinder head had been severely cracked in between the valve seats and the combustion chamber due to a fuel replated (sic) problem this engine had." "The damage caused to the cylinder head was caused from the injector fuel pump and fuel injectors. We found that the fuel pump and fuel injectors required repairs as when they were tested it indicated to us that it was over fuelling the engine." The document goes on to say that the cylinder bores severely damaged and glazed which was contributed to over-fuelling causing damage to the piston rings and collapsing the piston skirts. The document further states the problem with the engine was one that had been persisting for "well over three months." And because the damage was caused by an internal problem it would not have been apparent on an external visual inspection. 12The applicant also claims that the vehicle was sold at a higher price than what the general market level was for vehicles of that age and mileage. To support this, an extract from Automotive Data Services Pty Ltd (Red Book) was tendered. That showed for 1998 Nissan Patrol, GU ST Wagon, seven seat and five speed manual gear box in average condition with 250,816 kilometres the price range for private sale ranged from $12,950.00 for a vehicle in as new condition to $6,050.00 for a vehicle in poor condition giving an average price of $8,900.00. The trade in price ranged from $10,350.00 to $3,450.00 giving an average of $6,300.00. He disputed the costs of the extras as stated by the respondent in his affidavit but no evidence as to their value was tendered by the applicant. 13The applicant has had the vehicle repaired and has had other work done beyond the repair of the engine head and the lower part of it. The total costs of the applicant are $18,155.30. 14The respondent in his affidavit listed the extras that were attached to the vehicle. The extras fitted are a Kaymar rear bar, rear tyre carrier extender, snorkel for a turbo diesel, T15 bull bar, steel Outback side steps, turbo timer, steel roof rack with mesh floor, 2x XGS Gold Edition STD + 50mm, heavy duty 50mm front and rear lift springs, Mickey Thompson Baja MTZ's 33", GNE radio and antennae. Annexure A to the affidavit gives a total value for these as $11,416.54. 15Annexure C of the affidavit is a copy of the Red Book valuation which values the vehicle for private sale at $11,900.00 - $14,800.00. This valuation does not include any extras. 16The respondent stated in his affidavit that the applicant did not wish to have the vehicle "checked out" by a qualified mechanic. 17The respondent attached to his affidavit at "G", a copy of typed notes received from National Warranty Company. These were of conversations between the applicant, his wife and claims officers. On 31 October 2013 the warranty was entered. On 15 November 2013 the premium was received. The notation of 8 January 2013 is of a conversation with the applicant's wife who inquired whether the policy covered a thermostat housing. The response was that they covered the thermostat but not the housing. It was recorded that the engine was overheating. Mary Burton, the wife of the applicant in her affidavit tendered to the Tribunal denied that she had made any statement that the engine was overheating. The next notation is on 29 January 2013 to the effect that the vehicle had broken down near Bathurst and what were the procedures for making a claim. 18The sale of the vehicle to the applicant by the respondent was done so under the provisions of the Motor Dealers Act 1974. That Act did not require the respondent to provide the applicant with a warranty. The act however does not exclude the respondent from the provisions of the Australian Consumer Law (ACL). 19Section 54 of the ACL provides; 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) 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. (4) If: (a) goods supplied to a consumer are not of acceptable quality; and (b) the only reason or reasons why they are not of acceptable quality were specifically drawn to the consumer's attention before the consumer agreed to the supply; the goods are taken to be of acceptable quality. (5) If: (a) goods are displayed for sale or hire; and (b) the goods would not be of acceptable quality if they were supplied to a consumer; the reason or reasons why they are not of acceptable quality are taken, for the purposes of subsection (4), to have been specifically drawn to a consumer's attention if those reasons were disclosed on a written notice that was displayed with the goods and that was transparent. (6) Goods do not fail to be of acceptable quality if: (a) the consumer to whom they are supplied causes them to become of unacceptable quality, or fails to take reasonable steps to prevent them from becoming of unacceptable quality; and (b) they are damaged by abnormal use. (7) Goods do not fail to be of acceptable quality if: (a) the consumer acquiring the goods examines them before the consumer agrees to the supply of the goods; and (b) the examination ought reasonably to have revealed that the goods were not of acceptable quality. 20Under the ACL the vehicle supplied to the applicant is required to be of acceptable quality. Section 54(2) sets out the criteria required to establish acceptable quality. Section 54(3) are matters to be considered for the purpose section 54(2). 21The vehicle supplied to the applicant is a Nissan Patrol four wheel drive vehicle. At the time of sale it was 15 years old being built in September 1998. Its history is not known but being a four wheel drive vehicle it has a capability of traveling off-road. It had travelled 250,816 kilometres. The evidence relied on by the parties as to its price derives from the same publication which is the Red Book. That book is a guide only. The vehicle sold to the applicant has accessories fitted to it that would increase its price. There is no evidence that there was an inequality in the bargaining power of the parties and the price paid is one that arose from the negotiating process. The applicant does not dispute that he was unaware of the particulars of the vehicle. He believed the engine would have a life of 500,000 kilometres but gives no basis for this belief. The applicant does not provide any evidence as to representations made by the respondent or the manufacturer of the vehicle that he relied upon and knew it did not attract a warranty. 22The engine overheated on 28 January 2014 about three months after purchase. The engine when dismantled showed that the head had cracked and there was water damage to the lower part of the engine. The report signed by ARA Kelleyan states that the bore of the cylinders were glazed which led to the conclusion there was over fuelling, a condition of the engine for "well over three months." The document is unsatisfactory as it refers to "we" it is not clear as to who did the examination of the engine and the qualifications of that person. The method of testing the injectors and the diesel pump is not stated. Neither is the name of the person who did that testing nor their qualifications to do so e.g. were they an experienced diesel mechanic? The Tribunal therefor is not satisfied on the balance of probabilities that over fuelling was a condition of the engine for "well over three months". The vehicle was driven after it had overheated. The report does not disclose the time when the head cracked. 23In consideration of the evidence before it the Tribunal in considering the provisions of section 54(2) of the ACL finds the vehicle was at the time of sale, capable of travelling off-road (52(2)(a), was of acceptable appearance(52(2)(b), it was safe (as there was no dispute as to any e-safety inspection report) (52(2)(d), and durable consistent with a vehicle of that age and distance travelled (52(2)(e). 24In regard to section 52(2)(c)), the applicant inspected the vehicle and drove it. It was not inspected by a qualified person at that time but having regard to its age and distance travelled it may have been prudent to do so. The evidence shows there was a problem relating to overheating with the engine in late January 2014. The question that needs to be answered is whether the cause of the overheating was present at the time of supply? For the reasons given at 22 above the Tribunal is not satisfied on the balance of probabilities the cause of the overheating was a defect present in the vehicle present at the time of supply. 25For these reasons the application is dismissed. J McMillan 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