Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Koutsis v North Shore Automotive Pty Ltd [2019] NSWCATAP 282 Hearing dates: 3 October 2019 Date of orders: 28 November 2019 Decision date: 28 November 2019 Jurisdiction: Appeal Panel Before: M Harrowell, Deputy President M Anderson, Senior Member Decision: Leave to appeal should be refused and the appeal should be dismissed. Catchwords: CONSUMER LAW – motor vehicle repair services – supply of specified services – obligation to investigate and report issues unrelated to services requested – subsequent failure of engine – liability of repairer. Legislation Cited: Australian Consumer Law (NSW) Civil and Administrative Tribunal Act, 2013 (NSW) Cases Cited: Al-Daouk v Mr Pine t/as Furnco Bankstown [2015] NSWCATAP 111 Collins v Urban [2014] NSWCATAP 17 Category: Principal judgment Parties: Kaliopi Koutsis (First Appellant) William Karagounis (Second Appellant) North Shore Automotive Pty Ltd (Respondent) Representation: Solicitors: Appellants (Self Represented) K Sona (Business Development Manager) (Respondent) File Number(s): AP 19/35399 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal of New South Wales Jurisdiction: Consumer and Commercial Division Citation: N/A Date of Decision: 7 June 2019 Before: M Eftimiou, General Member File Number(s): MV 19/09890 reasons for decision Introduction 1. The appellants, Ms Kaliopi Koutsis and Mr William Karagounis, are the owners of the Mercedes-Benz motor vehicle which they had purchased second-hand from a third party in about March 2017. 2. The vehicle had been subject to a recall notice concerning a faulty airbag. On 24 September 2018 the respondent replaced the airbag and returned the vehicle to the appellants. Subsequently, inappropriate warning lights displayed on the motor vehicle. The vehicle was returned to the respondent on about 7 November 2018 and again on 2 January 2019 to correct these problems. 3. On 7 January 2019 the appellants made a booking with an alternative Mercedes-Benz repairer for the vehicle to be inspected and serviced because they considered the vehicle was not running properly. This booking was made for 9 January 2019. 4. However, the inspection and service did not take place because on 7 January 2019 the vehicle suffered a catastrophic engine failure. 5. The appellants commenced proceedings against the respondent claiming, inter alia, contraventions of the Australian Consumer Law (NSW) (ACL). The appellants contended that the respondent should have observed a rattling noise in the motor vehicle when it was inspected on 24 September 2018 and again on 2 January 2019 and should have been alerted to there being a major problem with the camshaft adjusters being worn which would lead to the timing chain breaking. This caused the catastrophic failure on 7 May 2019. This problem was a known issue with this particular vehicle type. Consequently, the failure to identify any problem was said to constitute a breach of the relevant consumer guarantees, including using due care and skill in the provision of services to a consumer. 6. On 7 June 2019 the Tribunal dismissed the appellants' application and provided written reasons for decision (Reasons). 7. The Tribunal found at p 4: There is little evidence that the respondent was put on notice by the [appellants] that the engine was making a rattling noise or that the vehicle sounded noisy when it was started, to alert it to an issue with the camshaft adjusters or the timing chain rattling. 1. The Tribunal noted the purposes for which the vehicle had been provided to the respondent, the age of the vehicle, the fact that it had travelled 3500 km since the airbag recall work had been undertaken. The Tribunal noted that the appellant had "declined to repair the rear seat belt buckle light" when the vehicle was returned to the respondent on 2 February 2019 to correct warning light issues. 2. The Tribunal also noted that the respondent had carried out a safety check as part of the work on 2 January 2019, which entailed checking oil levels, tyre pressure, coolant and brake fluids. 3. The Tribunal found that the services actually provided were carried out with due care and skill and that the vehicle had not been taken to the respondent for a service or to deal with the issue of a noise in the engine. In doing so, the Tribunal concluded there was "little evidence that a skilled mechanic when carrying out diagnostic and safety checks should have identified the mechanical fault": Reasons p 6. 4. Consequently, the Tribunal was not satisfied there had been a relevant contravention of the ACL. Rather, the Tribunal determined that: Any mechanical damage to the vehicle is as a result of fair wear and tear. 1. The appellants appealed the decision by Notice of Appeal filed 14 June 2019. The appeal was filed in time. Submissions and hearing of the appeal 1. The appeal was heard on 3 October 2019. The appellants appeared in person and Mr Sona, Business Development Manager, appeared for the respondent. 2. For the purpose of the appeal, the Appeal Panel was provided with the following evidence from the original hearing: 1. Exhibit A1 – invoice from respondent dated 2 January 2019. 2. Exhibit A2 – invoice from respondent dated 24 September 2018. 3. Exhibit A3 – recall notice dated 13 August 2018. 4. Exhibit A4 – "Blog" setting out "timing chain and camp adjuster issues" in respect of the Mercedes-Benz. 5. Exhibit A5 – Internet search concerning text threads about timing chain issue. 6. Exhibit A6 – statutory declaration of William Karagounis dated 31 January 2019. 7. Exhibit A7 – statutory declaration of Nikos Papadopoulos (mechanic) dated 31 January 2019. 8. Exhibit A8 – statutory declaration of Kaliopi Koutsis dated 31 January 2019. 1. In addition, the Tribunal received further documents being new evidence on which the appellants sought leave to rely. These documents were marked MFI 1 and consisted of various quotations to recondition the cylinder head and carry out other repairs to the Mercedes-Benz, and various emails concerning this work. 2. Leave was also sought in the Notice of Appeal to rely on fresh evidence to demonstrate that the engine had been rebuilt and was not subject to "wear and tear" as found by the Tribunal. This material was obtained by the appellants from the third party from whom they had purchased the vehicle. 3. No sound recording or transcript of the hearing was provided. 4. The parties provided written and oral submissions in support of their respective positions. 5. The appellants' grounds of appeal were as follows: 1. The Tribunal member gave insufficient weight to the [appellants'] evidence. 2. The Tribunal member failed to consider the evidence that the contract between the [appellants] and the respondent became more expansive on subsequent visits than the original intended appointment. 3. The Tribunal member failed to consider the evidence that further deterioration to the vehicle occurred over the duration of visits to the respondent. 4. The Tribunal member failed to consider the [appellants] expert evidence and the causal relationship between engine parts leading to the catastrophic engine failure which was not based as the Tribunal wrongly found on wear and tear. 5. Further new evidence has come to light which demonstrates that the engine had been rebuilt and was not subject to the "fair wear and tear" as found by the Tribunal member. 1. In Section B of the Notice of Appeal, the reasons why leave should be granted included: 1. that the Tribunal failed "to consider critical evidence from the [appellants] pertaining to the respondent's poor service as the vehicle had deteriorated and the [appellant] had arranged an appointment with another independent Mercedes Benz dealership"; and 2. that "the Tribunal should have given more weight to Ms Koutsis' evidence. Although it appears that she contradicted her evidence, her evidence indicates an honest and credible layperson struggling to alert the respondent's mechanics of her worsening vehicle to which they only gave here below the contractual standard expected by her as a concerned consumer. Indeed, out of frustration, Ms Koutsis arranged for an independent Mercedes-Benz opinion which supported her lay opinion that there was something drastically wrong with the vehicle, however, this critical evidence was not considered at all by the Tribunal member. 1. We understand the expert evidence to which the appellants are referring are various publications and a statutory declaration from Mr Nick Papadopoulos, whose company Combustion Auto Repair Pty Ltd had provided inspection and servicing facilities to the appellants. 2. In that evidence, Mr Papadopoulos said that there was a known problem with this model of vehicle which can result in the timing chain stretching or slipping or even breaking and the valves being bent: Ex 7 at para 7. This problem, Mr Papadopoulos said, could be diagnosed "because of the sound made from the problem can show adjusters and the timing chain when the car engine is started": Ex 7 at para 6. 3. Mr Papadopoulos also gave evidence that he had carried out servicing work to the motor vehicle on 3 August 2018 and that the vehicle exhibited no signs of this problem at that time: Ex 7 at para 9 and Annexure C (being the invoice from Combustion Board a Repair for that servicing work. 4. Having regard to this evidence, the appellants submitted that there was an admitted problem which Mercedes-Benz was aware of with this particular model of vehicle and that there would have been checks carried out and at certain mileages various servicing work would need to be undertaken. 5. The appellants said that the motto of the respondent was "service beyond excellence", that the car was not running correctly and that given the known problem, the duty upon the respondent was a higher standard. The appellants said that the only work carried out by the respondent was to replace the airbag and check and correct the warning lights and that the failure to diagnose and take action in relation to matters which ultimately cause the failure of the engine was a breach of the respondent's relevant duty. 6. In making these submissions, the appellants said that there had been three visits to the respondent and that Ms Koutsis had said to the respondent "things are getting worse". 7. In reply, the respondent submitted that the vehicle had never been serviced by it nor had the appellants requested such a service to be carried out. The vehicle had been delivered to them to replace the airbag pursuant to the recall notice and, subsequently, to correct the warning light malfunctions. A safety inspection had been carried out on 2 January 2019 and there were no relevant signs of the engine rattling at this time. 8. Further, the respondent submitted that if the new evidence is accepted, the engine had been reconditioned. Consequently, the respondent appeared to assert that this work made improbable a failure of a type caused by the improper or inadequate servicing as the engine components were not of an age where such a problem would have manifested itself. Consideration 1. The appellants require leave to appeal. Leave to appeal may only be granted if the Appeal Panel is satisfied the appellants may have suffered a substantial miscarriage of justice: see s80(2)(b) and Sch 4 cl 12(1) of the Civil and Administrative Tribunal Act, 2013 (NSW) (NCAT Act). The principles applicable to the grant of leave are set out in Collins v Urban [2014] NSWCATAP 17. 2. The appellants have asserted that the Tribunal failed to consider some evidence, which may be an error of law for which leave to appeal is not required. In our view these grounds are not made out, it being clear that the Tribunal has evaluated all the evidence provided to it. 3. The appellants seek to rely on new evidence which we have identified above. In our view, this new evidence was reasonably available at the time of the original hearing. Consequently, it should not be permitted in the appeal. See Sch 4 cl 12(1)(c) of the NCAT Act and Al-Daouk v Mr Pine t/as Furnco Bankstown [2015] NSWCATAP 111. 4. The substance of the appellants' complaint is that the Tribunal should have found on the evidence before it that: 1. The engine was exhibiting signs of a particular noise which was associated with a known common defect for this vehicle type. 2. The communications between the appellant and the respondent in requesting the replacement of the airbag, correction of warning light problems and the carrying out of a safety check required the respondent to undertake a broader diagnostic and evaluative process of the vehicle when in its possession. 3. Consequently, the respondent had an obligation to carry out diagnostic and servicing work which, if carried out, would have identified and corrected the problem which ultimately caused the catastrophic failure of the engine. 4. The lay and expert evidence provided by the appellants established that the catastrophic failure of the engine was caused by a breach of the respondent's obligation for which the appellants are entitled to recover damages. 1. In our view, the evidence provided to the Tribunal does not establish the vehicle was exhibiting relevant signs of "rattling" at the time it was in possession of the respondent nor does the evidence established that the engine failed by reason of the problem said to be common amongst vehicles of this type. 2. The appellants' witness, Mr Papadopoulos, gave evidence that he serviced the vehicle on 3 August 2018, at which time it did not exhibit any rattling noises. This evidence records in and Annexure C to his statement that Combustion Auto Repair carried out a service of the vehicle on behalf of the appellants. 3. Mr Papadopoulos does not give evidence concerning any inspection of the vehicle after it had failed nor has he opined as to the cause of that failure (as opposed to the generic problem identified with the model concerning "the design of camshaft adjusters which become worn and lead to timing chain to make rattling noise and sound noisy when you start the car"): Ex 7 para 4. 4. There is no photographic evidence of the failed engine nor is there other expert evidence provided in the appeal that establishes the actual cause of the failure of the engine in the appellants' vehicle. 5. The respondent's evidence, as recorded by the Tribunal, indicates that the vehicle was provided for limited purposes, which we have set out above. The appellants did not contend that they had ever asked the respondent to service the vehicle nor had the vehicle in fact been serviced by the respondent at any time. The only evidence of servicing actually carried out to the vehicle was that performed by Mr Papadopoulos on 8 August 2018, approximately 6 weeks before the vehicle was provided to the respondent (a Mercedes-Benz dealer) to replace the airbag pursuant to a recall notice. 6. In respect of the work carried out and the problems identified in the vehicle when carrying out the airbag replacement work and subsequent warning light diagnostic work, there was no challenge to the fact that the appellants did not want the respondent to carry out all necessary repairs. In this regard, the appellants did not want the respondent to carry out the work required to rectify a defective seatbelt warning light: Reasons at p 6. 7. Lastly, the respondent gave evidence that the cause of the failure was not the camshaft adjusters in the vehicle which are serviceable: Reasons at p 4. 8. The Tribunal's reasons record the evidence provided by the parties, analyses the effect of the evidence. The Tribunal concluded that the vehicle did not fail for the reasons asserted by the appellants. It did so on the basis that the camshaft adjusters in the failed engine did not exhibit the necessary signs to establish the asserted cause of failure. In addition, the Tribunal concluded that the vehicle was provided to the respondent for limited purposes, none of which entailed carrying out diagnostic and restorative work of a type which might have prevented the failure which occurred. 9. In reaching this conclusion, the Tribunal accepted the respondent's evidence that the vehicle was not showing signs of "rattling" in any event. 10. In these circumstances, the matters raised in this appeal do not establish that the appellants may have suffered a substantial miscarriage of justice or that the Tribunal was in error in its conclusions of fact. Orders 1. It follows from the above that 1. Leave to appeal should be refused and the appeal should be dismissed. ********** 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: 28 November 2019