Salim Investments Pty Ltd v MCM Autos Pty Ltd & Mazda Australia Pty Ltd [2015] NSWCATCD 115

Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Salim Investments Pty Ltd v MCM Autos Pty Ltd & Mazda Australia Pty Ltd [2015] NSWCATCD 115 Hearing dates: 14 July 2015 Decision date: 14 October 2015 Jurisdiction: Consumer and Commercial Division Before: D G Charles, General Member Decision: The application is dismissed Catchwords: Motor vehicle – Consumer Claim – acceptable quality & fitness for purpose – whether warrantable fault in respect of vehicle transmission – causation - testing methods of applicant's expert - remedies Legislation Cited: Motor Dealers and Repairers Act 2013 Motor Vehicles Taxation Act 1988 Fair Trading Act 1987 Fair Trading Legislation (Repeal and Amendment) Act 2015 Consumer Claims Act 1998 The Australian Consumer Law 2010 Competition and Consumer Act 2010 Cases Cited: Burton v Chad One Pty Limited [2013] NSWDC 301 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191 at 198 Category: Principal judgment Parties: Salim Investments Pty Ltd (applicant) MCM Autos Pty Ltd (first respondent) Mazda Australia Pty Ltd (second respondent) Representation: Alan Abdallah, solicitor for applicant Kevin Groz for first respondent Steve Groves for second respondent File Number(s): MV 15/04694 Publication restriction: Unrestricted

REASONS FOR DECISION

BACKGROUND FACTS & OVERVIEW OF THE PARTIES' RESPECTIVE CASES 1. The applicant, Salim Investments Pty Ltd, is a small proprietary company. Its director and principal shareholder is Ali Salim ("Mr Salim"). 2. The first respondent, MCM Autos Pty Ltd (hereinafter referred to as the "dealer"), was and is, at all material times, a licensed motor dealer under the Motor Dealers and Repairers Act 2013. 3. The second respondent, Mazda Australia Pty Ltd (hereinafter referred to as "Mazda"), was and is, at all material times, the manufacturer of motor vehicles for sale in Australia including the Mazda CX9 motor vehicle (hereinafter referred to as the "vehicle" or the "subject vehicle") which is the subject of this application to the Tribunal. 4. On or about 4 October 2011, the applicant purchased the subject vehicle brand new from the dealer for a purchase price of $54,000.00. 5. Mr Salim took delivery of the vehicle on 14 October 2011. 6. Mazda (referred to as the Distributor in the warranty documents) provided a three year new car warranty on the subject vehicle. The warranty provides, among other matters, that: "the Distributor warrants each new Mazda passenger car purchased on or after 1st June 1997, to be free, under normal use and maintenance, from defects in materials and workmanship", further that: "an authorised Mazda Dealer or the Distributor shall, at its discretion, either repair or replace any genuine Mazda part that is defective in material or workmanship, within the warranty term, without charge to the owner(s)", and also that: "rights given or created in favor of the buying public by legislation cannot be excluded or limited, and this vehicle warranty is to be read and construed as additional to and not restrictive of such statutory rights or warranties." 7. Following its purchase in 2011, the subject vehicle was serviced regularly by the dealer. 8. One such service occurred on 29 May 2014. The vehicle had then travelled 36,091 kilometres. Mr Salim reported a 'clunk' sound after the vehicle was placed into the 'drive' position and also that the vehicle shakes on acceleration. The dealer's Service Report states: "CHECK CLUNK WHEN PUT INTO DRIVE, VEHICLE SHAKES INTO DRIVE Checked and found there to be a slight clunk in drive Inspected auto oil level condition All ok Tested with another CX9 and found to be normal characteristic of the vehicle Inspected all engine mounts all ok Carried out PCM update tested all ok FST inspection submitted" 1. When the issue with the 'clunk' sound and shaking persisted, the vehicle was presented again to the dealer on 13 June 2014 for servicing. The Service Report states: "CHECK VEHICLE SHUDDERS WHEN SHIFTING INTO DRIVE Checked and found vehicle to shudder when shifting into Drive Carried out tech bulletin NS016 14 TCM would not update Technical advised to replace the TCM with the provided part no. Removed and replaced the TCM, updated TCM software. Performed TCM learning procedure. Road tested vehicle. All ok Refer technical report MA27028 and PAR 216751". 1. As the issues had not been resolved to the applicant's satisfaction, the vehicle was serviced again on 7 July 2014. The Service Report states: "CHECK VEHICLE SHUDDERS WHEN SHIFTING INTO DRIVE AND EXCESSIVE CLUNK AND NOISES HEARD CHECKED VEHICLE OPERATION AND SCANNED TCM AND PCM AND FOUND NO TROUBLE CODES WERE DETECTED ROADTESTED VEHICLE WITH MAZDA FMT AND FOUND VEHICLE TO BE OPERATING IN AND WITHIN NORMAL OPERATING SPECIFICATIONS. CHECKED GEARBOX OIL LEVEL ALL OK ROAD TESTED FURTHER WITH EXTENSIVE DRIVING AND FOUND TO STILL BE OPERATING PERFECTLY CUSTOMER TO MONITOR AND RELATE BACK TO DEALER IF CONCERN ARISES''. 1. The applicant's concerns with the vehicle persisted and the vehicle was returned to the dealer on or about 21 August 2014. On this occasion a new transmission unit was fitted on the vehicle. This work was done under the warranty and therefore without charge to the applicant. The Service Report provides this statement as to the dealer's diagnosis and repair of the vehicle: "AUTO TRANSMISSION CHECK GEARBOX SLIPPING/CLUNKING INTO GEAR/FMT INSPECT checked and found harsh shifting to be occurring during gear selection from park to drive carried out pressure test and found lines pressure to be below specs causing gearbox to clunk into gear removed airbox battery coolant lines oil cooler exhaust system and all other components as per workshop manual instructions removed and replaced transmission with Brand New unit refitted all components refilled with new transmission oil rechecked levels carried out transmission initial learn procedure retested vehicle with Mazda FMT present all ok". 1. Not satisfied that the issues with the vehicle had been addressed by the dealer, the applicant made complaint by correspondence to Fair Trading NSW on 8 October 2014. The written complaint stated, among other matters, that the applicant was not satisfied that the vehicle was safe to drive and that Mr Salim's wife: "who is the main driver of this vehicle is not driving it as we believe the car has permanent manufacturing faults and is dangerous". 2. Following such complaint to Fair Trading NSW the vehicle was returned to the dealer for further servicing. The Service Report bearing date 11 December 2014 says: "CHECK GEARBOX SHUDDER WHEN PARK TO DRIVE FMT INSPECT CHECKED AND FOUND GEARBOX TO HAVE EXCESSIVE SHUDDER WHEN ENGAGING DRIVE FROM REVERSE FMT TESTED AND FOUND EXCESSIVE PLAY WITHIN THE TRANSFER CASE ASSEMBLY DUE TO AN INTERNAL FAILURE REMOVED AND REPLACED THE TRANSFER CASE ASSEMBLY DUE TO AN INTERNAL FAULT, REFILLED WITH NEW OIL CHECKED LEVELS AND ROADTESTED VEHICLE WITH CUSTOMER SERVICE MANAGER, ALL OK" 1. On 28 January 2015 the applicant lodged an application with the Tribunal seeking orders against the respondents. In essence, the applicant's case is that the vehicle has an inherent manufacturing defect which cannot be repaired and that the respondents are in breach of contract (the case against the dealer) and in breach of the manufacturer's warranties (the case against Mazda). The primary remedy sought is a full refund of the purchase price paid for the vehicle (i.e. damages in the amount of $54,000.00); alternatively, the applicant seeks damages based on the market value (said to be $37,100.00) of the vehicle as at May 2014 being the time the applicant submits that the vehicle's inherent manufacturing defect became apparent. Further or alternatively to damages, the remedy sought by the applicant is in the nature of specific performance of the obligations in the warranty; that is, in circumstances where the cause of the vehicle's defect cannot be identified and the method of repair cannot be ascertained, it is incumbent on the respondents to replace the subject vehicle with a vehicle which is free from defects. 2. The respondents deny that there is any inherent manufacturing defect in the subject vehicle. They submit that any movement of the transmission whilst changing gears from reverse to drive is intermittent only and does not affect the driveability or safe operation of the vehicle in any way during its normal on road use. The respondents submit that a case for any relief whether a full refund, damages commensurate with the value of a replacement vehicle as at May 2014, or the supply of a replacement vehicle is not made out on the evidence.