Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Ace Action Motors Pty Ltd v Cooper [2017] NSWCATAP 119 Hearing dates: 9 March 2017 Date of orders: 25 May 2017 Decision date: 25 May 2017 Jurisdiction: Appeal Panel Before: M Harrowell, Principal Member R Titterton, Senior Member Decision: 1) Leave to appeal is granted in respect of the award of damages for repairs to the wiper blades and two tyres of the respondent's vehicle. 2) The appeal in respect of the award made for the wiper blades and two tyres is allowed. 3) Order 1 made by the Tribunal on 7 November 2016 in application MV 16/34049 is varied to read as follows: 1. The respondent, Ace Action Motors Pty Ltd is to pay the applicant, Patrick Cooper the sum of $4200 within 7 days of the date of this order. Catchwords: Claim for breach of consumer guarantee under the Australian Consumer Law (NSW), leave to appeal, no issue of principle. Legislation Cited: Australian Consumer Law (NSW) Civil and Administrative Tribunal Act 2013 Civil and Administrative Tribunal Rule 2014 Motor Dealers and Repairers Act, 2013 Cases Cited: Collins v Urban [2014] NSWCATAP 17 Texts Cited: Nil Category: Principal judgment Parties: Ace Action Motors Pty Ltd (Appellant) Patrick Cooper (Respondent) Representation: Counsel: I Jamal (Appellant) By Phone (Respondent) Solicitors: Abbas & Co Lawyers (Appellant) File Number(s): AP 16/52847 Publication restriction: Unrestricted Decision under appeal Court or tribunal: NSW Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: Not applicable Date of Decision: 7 November 2016 Before: P French, General Member File Number(s): MV 16/34049 reasons for decision Introduction 1. This is an appeal by a motor dealer against an order of the Consumer and Commercial Division of the Tribunal that it pay to the respondent the sum of $4,410.00 being compensation for the cost of repairs to a motor vehicle which the respondent had purchased from the appellant. 2. The orders of the Tribunal were made on 7 November 2016 following a formal hearing. Written reasons were provided by the Tribunal for its decision. 3. The motor vehicle had been purchased by the respondent from the appellant on 15 July 2016 for an amount of $5700.00. No guarantee was provided under the Motor Dealers and Repairers Act 2013. 4. The Tribunal found that there were contraventions of s 54 of the Australian Consumer Law (NSW) (ACL) because the vehicle was not of acceptable quality. Consequently, the Tribunal made an award for the following amounts: 1. $2,600.00 being the estimated cost of repairs of items in inspection report dated 22 August 2016 ($850.00 of which had been invoiced on 30 August 2016 and paid for by the respondent). 2. $1,700.00 being repairs to the alternator and gaskets on about 21 July 2016. 3. $110 being part of the cost of a new battery (the balance of $50 having been paid by the appellant). 1. The appellant appealed the Tribunal's decision by Notice of Appeal dated 30 November 2016, which was filed on 2 December 2016. The Notice of Appeal was filed within time. Grounds of appeal and hearing of the appeal 1. The appellant sought the following orders on appeal: 1 That the respondent's application filed 26 July 2016 be dismissed. 2 In the alternative to 1 above, that the appellant arrange for and pay all reasonable cost to repair any damage and defects that were in existence at the time of sale of the subject vehicle after the vehicle has been independently assessed. 3 That the respondent pay the appellants costs of the appeal; and 4 Any further such orders that the Tribunal sees fit. 1. The grounds of appeal can be summarised as follows: 1. The appellant was denied the opportunity to inspect the vehicle the subject of the dispute so as to obtain necessary evidence, and the Tribunal gave little or no weight to this fact in making its decision. 2. The Tribunal placed too much weight upon certain evidence without questioning the discrepancies or contradictions that arose. 3. By reason of the manner in which the Tribunal conducted the hearing, the appellant "didn't get the chance to properly put forward his case and ventilate the concerns he had with the respondent's evidence". 4. In circumstances where the parties had "very different views as to the condition of the Vehicle, this is a matter where the Vehicle should have been sent away for independent assessment". 5. The vehicle had been independently inspected and found to be in good and roadworthy condition prior to its sale. The Form 5 Notice provided to the respondent contained information about the vehicle, including it having previously been involved in a significant accident. 6. The evidence adduced by the respondent at the original hearing was inconsistent. For example, the first inspection report did not disclose issues raised in a subsequent report. 7. The motor vehicle had suffered damage due to water damage from heavy rain on about 1 August 2016. This damage had apparently not been repaired by the respondent. The Tribunal failed to properly consider this matter and/or the appellant raises "concerns that the alleged water damage was caused by the respondent and the way he drove the vehicle and not enough emphasis was placed on this fact". 1. The appellant was represented by Mr Jamal, solicitor, who provided written and oral submissions in support of the appeal. 2. In relation to the issue of procedural fairness, the appellant claimed that it was denied an opportunity to inspect the subject vehicle. The appellant said that various communications had been sent to the respondent to request access. However, no response to these requests had been provided by the respondent nor had access in fact been granted. Consequently, the appellant said it had been "denied an opportunity to have the subject vehicle assessed to determine the true condition of the vehicle". The appellant sought to rely on additional text messages apparently sent by one of its employees to the respondent seeking access to the vehicle which it said "had also recently come to light". 3. The appellant contended that the vehicle had been inspected and test driven by the respondent prior to purchase "who obviously deemed the vehicle satisfactory", and that the vehicle had previously been independently inspected and found to be "in good and roadworthy condition". 4. The appellant also made submissions to the effect that the Tribunal failed to properly evaluate evidence, including whether the respondent's repairer had properly carried out the first set of repairs and whether or not these repairs contributed to the second set of defects identified. In addition, the appellant reiterated that the Tribunal had failed to properly evaluate the consequence arising from water ingress and an insurance claim that had been made by the respondent in relation to this matter. In making these submissions, the appellant said that because "both parties had very different positions as to the condition of the vehicle at the point of sale, this vehicle should have been referred for independent assessment". 5. The appellant also took issue with various photographic evidence and text messages which had been tendered in evidence. The appellant challenged where those text messages came from and whether or not the photographs were "actually the subject vehicle". 6. In reply, the respondent filed a Reply to Appeal and provided written submissions and other documentary evidence from the original hearing. 7. The respondent's submissions can be summarised as follows: 1. The appellant had an opportunity to present its case. The parties were given an opportunity to cross-examine. The hearing occurred in circumstances where directions had been made prior to the hearing requiring each party to provide all evidence upon which they wished to rely. 2. The Tribunal made its decision based on the evidence before it. The appellant did not provide any evidence to support its contention that there were no faults the vehicle. The appellant did not, before the hearing, request any order to access the vehicle for the purpose of preparing its evidence nor did it make any request to the Tribunal for an order that an independent expert report as to the condition of the vehicle be prepared. 3. The respondent had attempted to return the vehicle after its purchase to the dealership. However, the appellant or its employees had refused to accept delivery. Also, the appellant had not made good on any offered to reimburse the respondent for repairs. 4. The vehicle was inspected by a professional motor vehicle repairer who has reported on the defects which the Tribunal accepted. This evidence was supported by relevant photographs. Also, the odometer records for the vehicle show that the distance travelled from when the vehicle was purchased to when some of the defects were identified was minimal, the effect of the submission being that use of the vehicle was not the cause of the defect. 5. No claim was made in connection with the water damage to the vehicle. This damage is irrelevant to the defects identified by the respondent for which the Tribunal made an award. 6. Consequently, no error was made by the Tribunal in making an award in favour of the respondent. 1. During the hearing of the appeal, a number of additional issues arose. 2. The appellant had arranged for the issue of a summons seeking production of documents for the purpose of the appeal from the insurance company of the respondent's claim relating to water ingress of the vehicle. However, this material that could have been requested for production at the original hearing if it had been relevant. 3. In relation to the new evidence the appellant sought to adduce on the appeal, being the text messages found in Annexure B to the appellant's submissions, the appellant submitted that this evidence was not reasonably available at the time of the original hearing. However, in making this submission the appellant accepted that the evidence could have been obtained if it had made enquiries at the relevant time. 4. During the respondent's oral submissions, the Appeal Panel raised with the respondent the fact that the wiper blades and the tyres on the vehicle had been identified as being worn or in need of repair in the report provided by the appellant at the time of sale of the motor vehicle. This report is Annexure E to the appellant's bundle. The Appeal Panel noted that the amount awarded in favour of the respondent included an allowance for these items. The respondent submitted that the vehicle had only travelled approximately 800 km, suggesting that these items should not have become defective in this period of time. The Appeal Panel identified that the cost of the wiper blades and the supply and fitment of a second-hand tyre were included in the motor vehicle repairer's invoice dated 7 September 2016 totalling $850.00 for which allowance had been made in the Tribunal's award. The respondent accepted that it may be appropriate to make a deduction for these items in the circumstances. Consideration 1. This is an appeal under s 80(2)(b) of the Civil and Administrative Tribunal Act, 2013 (NCAT Act). There is a right of appeal on a question of law. Otherwise leave to appeal is required. 2. The appellant asserts he was denied procedural fairness. This is a question of law. 3. Otherwise, it appears the appellant challenges the findings made by the Tribunal on the evidence before it. These grounds raise questions other than a question of law. Therefore leave to appeal is required. The principles applicable to the grant of leave were set out by the Appeal Panel in Collins v Urban [2014] NSWCATAP 17. Cl 12 of Sch4 of the NCAT Act applies and the appellant must show it may have suffered a substantial miscarriage of justice in order for leave to be granted. Denial of Procedural Fairness Ground 1. The appellant asserts a denial of procedural fairness which is said to arise in circumstances where he was not afforded an opportunity to inspect the respondent's motor vehicle. 2. The appellant also asserts it was denied procedural fairness by reason of the manner in which the original hearing was conducted. The appellant informed the Appeal Panel that it had not asked the Tribunal for an adjournment on the basis he needed to inspect the vehicle. However, the appellant said that it did raise the fact that it could not get access to the vehicle at the original hearing and that the respondent acknowledged he had received requests for access via text messages. The appellant says that this conduct at the hearing amounted to a denial of procedural fairness. 3. At [2] of its reasons, the Tribunal said: The application was first listed in a Group List for Conciliation and Hearing on 23 August 2016. Efforts of the parties to resolve the dispute in conciliation were not successful. When the matter returned to the hearing room the application was adjourned for hearing. The applicant was given leave to amend the claim, and directions were given for the filing and service of evidence. 1. The Tribunal then records at [4] of its reasons: Mr Elskaf, Director, attended the hearing on behalf of the respondent and gave evidence under oath. He submitted into evidence a copy of the Form 5 Motor Vehicle Dealers Notice the respondent issued to the applicant at the time of sale; copies of a tax invoice and inspection report issued to the respondent by Hype Automotive dated 27 May 2016; and, copies of text will messages sent by the respondent to the applicant dated 14 and 19 October 2016. 1. In relation to the text messages dated 14 and 19 October 2016, the Tribunal found at [26]: The respondent placed particular reliance upon two text messages which Ms (sic) Elskaf sent to the applicant on 14 and 19 October 2016 which referred to the applicant's amended claim, and which invite the applicant to return the motor vehicle to the respondent for inspection and repair. Mr Elskaf contends that he is now willing to inspect, and if necessary carry out any repairs required to the motor vehicle. However, having regard to the history of the matter outlined above I am comfortably satisfied that the respondent has failed to inspect and carry out the necessary repairs to the vehicle within a reasonable time and that the applicant was and is entitled to elect to have these repairs carried out elsewhere, including those that remain to be completed. I am satisfied that the quotation for these repairs (which is $2600.00), some of which have been carried out (at a cost of $850) is a reasonable commercial cost for which the applicant is entitled to be compensated by the respondent. 1. In our view, in circumstances where directions had been made for the filing and service of evidence prior to the hearing and where no application for an adjournment was made by the appellant at the original hearing, there is no basis to conclude the Tribunal failed to afford the appellant a reasonable opportunity to provide evidence in support of its claim. 2. The proceedings were originally commenced on 27 July 2016. The proceedings had been listed before the Tribunal for conciliation and for directions prior to the original hearing on 23 August 2016. An amended application was filed by the respondent on 26 August 2016 and the matter was subsequently fixed for hearing on 7 November 2016. 3. No orders were sought at the directions hearing for access to enable the appellant to inspect the vehicle for the purpose of preparing its evidence. No application was made by the appellant to relist the matter before the final hearing so as to obtain an access order to inspect the vehicle. Lastly, no adjournment of the hearing was sought. 4. Rather, and in the absence of the sound recording of the original hearing being made available to the Appeal Panel, all that appears to have occurred is that the appellant has failed to take steps to deal with the issues raised on a timely basis and to prepare its evidence in accordance with the directions of the Tribunal. This view is corroborated by the fact that when first notified by the respondent of defects and the motor vehicle, rather than inspect the motor vehicle and make good any necessary defects, the sales representative for the respondent told the applicant to contact Mr Elskaf when he returned "from Bali in a 'few weeks'": decision at [5(j)]. 5. In these circumstances, there can be no denial of procedural fairness nor a failure by the Tribunal to provide the appellant with a reasonable opportunity to be heard. Leave to appeal and challenge to findings of fact 1. The Tribunal made an award in favour of the respondent on the basis that the motor vehicle was not of acceptable quality and that the appellant had breached the consumer guarantees found in s 54 of the ACL. 2. This required the Tribunal to consider whether the goods were fit for purpose, acceptable in appearance and finish, free from defects, safe and 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)". Subsection (3) requires the Tribunal to have regard to the nature of the goods, the price of the goods (if relevant), any representation made about the goods by the supplier and any other relevant circumstances. 3. In its notice of appeal, the appellant seeks orders on appeal as follows: 1. That the orders made by the Tribunal be set aside 2. That the respondent's application be dismissed; 3. In the alternative to order (2), that the appellant arrange for and pay all reasonable costs to repair any damage and defects that were existed at the time of sale of the subject vehicle after the vehicle has been independently assessed. 1. As can be seen from these orders, the essential question is whether or not the Tribunal was correct in determining the vehicle was defective and that the reasonable costs to rectify those defects was $4,410.00. 2. A determination of this aspect of the appeal and the application for leave to appeal requires a consideration of the state of the vehicle when sold and the evidence provided by the parties concerning the defects about which the respondent complained. 3. As indicated above, the liability under the guarantee as to acceptable quality found in s 54 of the ACL must have regard to the state of the goods when sold. 4. In the present case, the vehicle that was sold was a BMW 120i that was registered. The appellant provided with the motor vehicle an inspection report from Hype Automotive dated 27 May 2016. That report confirmed the vehicle had been inspected and each of the various components of the motor vehicle had been checked and ticked as operating correctly. The only exception noted were the wiper blades which were marked with an "X". In addition, the report noted: 1. The front brake pads were approximately 20% and the rear brake pads were approximately 40%; 2. That the minimum tread depth for tyres was 1.5 mm and that: 1. off-site front tyre depth was 2.3 mm; 2. nearside front tyre depth was 2.3 mm; 3. offside rear tyre depth was 1.8 mm; 4. nearside rear tyre depth was 1.9 mm 1. That the vehicle had been road tested on a motorway at 110 km/h. 1. In addition, this report contains the following narrative under the heading "Comments": Vehicle is in good roadworthy condition. All electrical and mechanical components are in working order and no faults were found at the time of inspection. Note!! Vehicle has had an impact on the N/S/F of vehicle and is reported on the PPSR register. 1. The Tribunal made an award consisting of three amounts. These were $110 being the balance of the cost of a replacement battery, $2,600 to carry out repairs detailed in a quotation dated 22 August 2016 and $1,700 for the repairs to the alternator and gaskets of the motor vehicle. It is convenient to deal with each of these items in turn. Battery- $110.00 1. The evidence of the respondent was that immediately after paying for the motor vehicle, he could not start the vehicle and that the battery needed to be replaced. The respondent was taken to a nearby battery retailer by the appellant. The appellant refused to supply a new battery. The respondent purchased a new battery at a cost of $160 for which the respondent was only prepared to reimburse the respondent $50. 2. On any view of this evidence, the battery was defective and not fit for purpose. The Hype Automotive report which the appellant provided the respondent in connection with the vehicle does not suggest there was any fault with the battery. To the contrary, the reports suggest the battery was operating satisfactorily. While a battery might fail over time, the fact it was not properly operating at the point of sale confirms it was not free from defects. Accordingly, the Tribunal was correct in awarding the respondent the sum of $110 being the difference between the cost of a replacement battery and the $50 which the appellant had been prepared to allow. $1,700 for the repairs to the alternator and gaskets 1. The Tribunal found that the motor vehicle was towed to the workshop of Automotive Services July 2016 to effect repairs "to the alternator and gaskets to make the vehicle roadworthy at an invoice cost of $1934.00 for which the repairer accepted a cash payment of $1700.00": reasons at [5(j)]. While the invoice was said to have been annexed to the respondent's submissions on appeal as part of his Annexure A, a copy of this document was not in fact provided by either party. However, as found by the Tribunal at [5(j)] and as recorded in the Automotive Services quotation for $2,600 dated 22 August 2016, the work carried out was to rectify the following: Alternator failed due to massive oil leaks at engine rocker cover, oil filter housing and cooler oil was leaking directly on alternator and exhaust PCV valve and breather hoses were blocked. At this time this repair found all gaskets and seals were previously not replaced but resealed by red and blue silicon were not recommended to use. 1. The Hype Automotive report provided by the appellant records as "satisfactory" engine oil leaks as well as coolant system leaks and transmission oil leaks. That is, this report suggests there are no such defects in the motor vehicle. Certainly there is no suggestion in this report that oil was leaking onto the exhaust pipe and/or the alternator. 2. In our view, the items claimed were clearly defects not otherwise identified in the Hype Automotive report. The vehicle was purchased on 15 July 2016, 6 days before it was necessary to tow the motor vehicle to Automotive Services and have these repairs carried out. There is no evidence to suggest the respondent did anything to cause these problems. 3. There is no evidence to suggest the cost claimed by the respondent were not reasonable to affect the repairs in question. In these circumstances, the Tribunal was correct to award the respondent this amount. $2600 to carry out repairs detailed in a quotation dated 22 August 2016 1. The last item to consider was the amount of $2,600.00 awarded in connection with the quotation dated 22 August 2016. 2. It should be noted that of the work detailed in this quotation, as at the date of the original hearing, the respondent had only had carried out work some of those items. 3. The work detailed in the quotation dated 22 August 2016 consisted of repairs to the following: 1. Engine oil leak at sump; 2. Two worn tyres; 3. Inoperative rear indicator globes; 4. Inoperative number plate globes; 5. Worn front wiper blades; 6. Broken timing chain and worn guides and tensioner. 1. As is evident from the invoice dated 7 September 2016 totalling $850.00, some of this work was done as part of the repairs carried out on this date. The work included removal and replacement of the sump gasket. The work also included the following: 1. $72.73 - fit and rebalance second-hand tyre (rear left); and 2. $45.45 - replace flexible wiper assembly; 1. However, also evident from the invoice dated 7 September 2016 is that some of the work which was the subject of this invoice was not part of the 22 August 2016 quotation. In this regard and amount of $60.00 is included to "Clean and service sunroof water drain channels to stop rainwater coming in car". 2. Be that as it may, the invoice dated 7 September 2016 is relevant to a determination of the proper amount which the respondent was entitled to receive as compensation for the defects identified in the 22 August 2016 quotation, which details the defects and the amount actually allowed by the Tribunal to rectify those defects. 3. In this regard, in making an award for $2,600.00 in favour of the respondent, the Tribunal allowed costs for replacing the wiper blades and replacing two tyres. 4. In our view, no allowance should have been made in respect of the wiper blades because the vehicle being sold was a second hand vehicle and the appellant had identified via the Hype Automotive report that they were in need of replacement. Otherwise, there was no warranty provided with the motor vehicle that would have required the appellant to rectify this matter. This is a matter which the respondent ought reasonably to have been aware of and is an item subject to wear-and-tear for which the appellant could not be responsible having regard to the nature of the goods, the age of the motor vehicle and the information contained in the Hype Automotive report. 5. Although the quotation dated 22 August 2016 did not separately cost these items, it is clear from the subsequent invoice dated 7 September 2016 that the amount for the wiper assembly was $45.45 exclusive of GST. Consequently, an amount of $45.45 plus GST, a total of $50.00 should be deducted from the amount of the quotation. 6. Similarly, no allowance should have been made by the Tribunal in respect of the two tyres contained in the quotation dated 22 August 2016. As is evident from the content of the Hype Automotive report, the tyres had sufficient tread on them such that the vehicle was roadworthy at the time the vehicle was sold to the respondent. However, the vehicle had been driven for approximately 2 months after this time. Consequently, there was no basis to conclude that there had been a breach of the relevant consumer guarantee in respect of the tyres. 7. The quotation dated 22 August 2016 provides no breakdown of the cost of these items so as to allow a deduction to be made. However, the invoice dated 7 September 2016 notes the cost to fit in supply at one tyre is $72.73 exclusive of GST. Neither party suggested this was not the reasonable cost for a single tyre. Therefore an allowance of twice this amount, namely $145.46 plus GST, at total of $160.00, should be deducted from the quotation for $2,600.00. 8. Save as provided above, the items identified in the quotation dated 22 August 2016, which we have set out above, are defects in the motor vehicle which affect the operation of the vehicle, none of which were identified in the Hype Automotive report. 9. The Hype Automotive report does not report any oil leaks. Nor does the report identify any internal mechanical problems, no doubt because an internal inspection had not been carried out. 10. However, the items are, on the evidence of the respondent's witness, matters that affect the operation of the vehicle. This evidence was not challenged by the appellant. Further, the check boxes for some of these items in the Hype Automotive report confirm these defects, if they exist, are matters which affect the roadworthiness of the vehicle and its suitability for registration. 11. The defects were either overlooked by the person who prepared the Hype Automotive report or they manifested themselves in a period of about one month since the date of purchase. In this regard the Appeal Panel notes that the evidence shows the motor vehicle had only travelled 828 km from when it was purchased on 15 July 2016 until 30 August 2016. This is evidenced by the tax invoice for the sale of the motor vehicle which records and odometer reading of 152,598 km and the odometer reading of 153,426 km recorded in the tax invoice dated 30 August 2016. Either way, they are defects which a reasonable consumer, fully acquainted with the state and condition of the goods (including any hidden defects of the goods) would not regard as acceptable within the meaning of s 54 of the ACL. 12. The cost of repairs of the defects is contained in the quotation dated 22 August 2016. No evidence was provided by the appellant that the cost of these repairs, if they existed, was not reasonable. 13. In these circumstances, save in respect of the wiper blades and tyres, there is no basis to conclude the decision of the Tribunal was against the weight of evidence or that the decision was not fair and equitable. 14. It follows that leave to appeal should be granted in respect of the claim for the wiper blades and the tyres and the amount awarded by the Tribunal should be reduced accordingly. We calculate the adjusted award as follows: 1. Amount of original award $4,410.00 2. Less: 1. Wiper blades $50.00 2. 2 Tyres $160.00 ($210.00) 1. Adjusted award $4,200.00 Orders 1. The appellant said orders should be made for the vehicle to be returned to it for repair, rather than an award being made for compensation. The Tribunal declined to make such an order. 2. In our view, the Tribunal was justified in doing so because, when notified of the respondent's initial complaints and his rejection of the vehicle, the appellant refused to accept return and did not offer to carry out any repairs at that time. Thereafter, the respondent arranged for some repairs to be carried out by his own mechanic as he needed the vehicle for work: see reasons at [5(h)-(k)]. 3. In these circumstances, a money order should be made, subject to the adjustments which we have set out above. 4. Accordingly, the Appeal Panel makes the following orders: 1. Leave to appeal is granted in respect of the award of damages for repairs to the wiper blades and two tyres of the respondent's vehicle. 2. The appeal in respect of the award made for the wiper blades and two tyres is allowed. 3. Order 1 made by the Tribunal on 7 November 2016 in application MV 16/34049 is varied to read as follows: 1. The respondent, Ace Action Motors Pty Ltd is to pay the applicant, Patrick Cooper the sum of $4,200 within 7 days of the date of this order. 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: 25 May 2017