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  4. Rees v Mighty Enterprises Pty Ltd - [2015] QCAT 312

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Rees v Mighty Enterprises Pty Ltd[2015] QCAT 312

Rees v Mighty Enterprises Pty Ltd[2015] QCAT 312

CITATION:

Rees v Mighty Enterprises Pty Ltd & Ors [2015] QCAT 312

PARTIES:

Stephen Rees

(Applicant)

v

Mighty Enterprises Pty Ltd

(First Respondent)

Graham Douglas Philp

(Second Respondent)

Pam Philp

(Third Respondent)

Lance Gregory Royston

(Fifth Respondent)

APPLICATION NUMBER:

GAR170-14

MATTER TYPE:

General administrative review matters

HEARING DATE:

3 June 2015

HEARD AT:

Brisbane

DECISION OF:

Member Lumb

DELIVERED ON:

7 August 2015

DELIVERED AT:

Brisbane

ORDERS MADE:

  1. The Applicant’s claim against the claim fund is rejected.
  2. The parties shall bear their own costs of the proceeding.

CATCHWORDS:

LICENSEE – CLAIM AGAINST THE CLAIM FUND – BUYER OF VEHICLE – whether false or misleading representation – reliance – whether buyer had proved financial loss

Property Agents and Motor Dealers Act 2000 (Qld), s 469, s 470, s 472, s 473, s 488, s 574

Agents Financial Administration Act 2014 (Qld), s 78, s 82, s 105, s 106, s 116, s 155

Criminal Code Act 1899 (Qld), s 24

Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 100

London & Anor v Reynolds [2006] QDC 380

Gurdag v Stillwell Ford Pty Ltd (1985) 61 ALR 689

APPEARANCES:

APPLICANT:

Stephen Rees

RESPONDENTS:

No appearance

REASONS FOR DECISION

  1. [1]
    On 3 October 2013, the applicant/claimant (‘Mr Rees’) made a claim against the claim fund (‘the Claim’) pursuant to the Property Agents and Motor Dealers Act 2000 (Qld) (‘PAMDA’). By the Claim, Mr Rees claims loss resulting from his purchase of a 2009 Mazda CX-7 Luxury Sports motor vehicle (‘the Vehicle’).
  2. [2]
    The Chief Executive accepts, and the respondents have not disputed, that the Claim complied with the requirements of s 473 of PAMDA and the Claim was lodged within the timeframe required by s 472(1) of PAMDA. I find that these requirements have been satisfied.
  3. [3]
    On 17 February 2014, Mr Rees gave the Chief Executive written notice that he wanted to proceed with the Claim (and the Chief Executive did not direct an investigation into the Claim).[1] The matter was referred to the Tribunal for determination pursuant to s 488 of PAMDA.

Mr Rees’ case

  1. [4]
    Mr Rees’ version of events is set out in a signed statement dated 4 July 2013 the relevant parts of which are as follows.
  1. [5]
    On or about 24 February 2012, Mr Rees noticed the Vehicle in the forecourt of the ‘Wheels That Work’ car yard on the corner of Ferry Road and Winchester Street, Southport at the Gold Coast.
  2. [6]
    The ‘Spec’ sheet on the front windscreen of the Vehicle stated that the Vehicle had an odometer reading of about 26,000 km and was still covered under a new car factory warranty for approximately nine months.
  3. [7]
    Mr Rees approached a salesperson who identified himself as Lance Royston (‘Mr Royston’) (who is the Fifth Respondent in this matter). Mr Royston informed Mr Rees that the Vehicle was previously owned by a friend of Wheels That Work and that he had traded the Vehicle through them. Mr Royston also said that the Vehicle’s sale price was $33,000.00 and at that price it was ‘too good to miss out on’.
  1. [8]
    Mr Rees informed Mr Royston that the biggest selling point for him was the bonus security of having the balance of a new car warranty still on the vehicle. Mr Royston informed Mr Rees that the new car warranty was still valid for approximately nine months. Mr Rees stated that the vehicle he intended to trade in had also been purchased from Wheels That Work with the balance of its new car warranty still intact and that this really appealed to Mr Rees.
  1. [9]
    Mr Royston told Mr Rees that he ‘couldn’t go wrong’. Arrangements were made for a test drive the following day.
  2. [10]
    On 9 March 2012, Mr Rees decided to purchase the Vehicle and he and Mr Royston negotiated a trade in price for Mr Rees’ existing. Mr Royston arranged finance for the purchase and prepared, issued and completed the contracts with Mr Rees. The agreed purchase price was $33,000.00.
  3. [11]
    On or about 16 March 2012 Mr Rees noticed that the Vehicle did not have a logbook or manual in the glove box and there was no spare key. He contacted Mr Royston who said to him ‘that’s strange’ and he would look into it for Mr Rees. Mr Rees followed this up numerous times but never received the logbook. On or about 1 August 2012, Mr Rees was provided with a brand new Mazda CX-7 manual.
  4. [12]
    On or about 28 “November” 2012, Mr Rees noticed an unusual carbon like smell coming from the exhaust of the Vehicle which was followed quickly by heavy smoke and a whining noise from the engine. Given the timing of subsequent events it appears that Mr Rees was intending to refer to October and not November 2012.
  5. [13]
    On 1 November 2012, Mr Rees and a friend attended Wheels That Work in relation to what Mr Rees could tell Mazda about the history of the Vehicle given that he did not have logbook. Mr Royston said ‘Don’t worry it won’t matter, you don’t need a logbook; all they need is the VIN number’.
  1. [14]
    On 2 November 2012, Mr Rees took the Vehicle to the Mazda dealership at Southport. Mr Rees was telephoned at about 1:00pm that day and informed that the Vehicle needed a new turbo and some related timing chain repairs totalling $7,750.00. Mr Rees was also informed that the vehicle had been ‘flagged’ which they informed him was their term for a vehicle presented to a Mazda dealer in the past that has been refused a warranty repair due to poor service history or a service history not current.
  1. [15]
    The material includes a tax invoice from Gold Coast Mazda at Southport dated 2 November 2012 (‘the November invoice’). It records a production date of 15 December 2009 for the vehicle and a delivery date of 7 January 2010. It also records that the amount of kilometres travelled by the Vehicle was 40,369.
  2. [16]
    The description of the work said to be required was as follows:

… CHECKED FOR WHINIGN [sic] NOISE FROM ENGINE FOUND TURBOCHARGER NOSIEY [sic] INTERNAL SHAFT MOVEMENT DUE TO POOR SERVICE HISTORY ALSO NOTICED TIMING CHAIN AND VVT ACTUATOR RATTLES ON START UP REQUIRES NEW PARTS TURBOCHARGER REPLACEMENT INC’S LABOUR & CONSUMABLES APPROX $6250 INC GST (APPROX 10 HOURS LABOUR) TIMING CHAIN & VVT ACTUATOR REPLACEMENT IN LABOUR & CONSUMABLES APPROX $1500 (APPROX. 5 HOURS OF LABOUR) VECHILE STILL UNDER WARRANTY HOWEVER CONTRACTED MAZDA AUSTRALIA REGARDING A CLAIM AND ALL WORK TO MOTOR & TRANSMISSION NOT WARRANTABLE DUE TO POOR/ NO SERVICE HISTORY. THERE IS A NOTATION REGARDING WARRANTY CLAIMS AGAINST THIS VEHICLE

  1. [17]
    On or about the 4 November 2012, the vehicle began smoking very heavily so much so that it was undriveable. Mr Rees contacted Wheels That Work and was informed by Mr Royston that a friend of the owner of the Wheels That Work who worked at East Coast Tyres & Auto, Southport had brought the Vehicle new and, at 24,000 km, the Vehicle developed a fault with the turbo.
  1. [18]
    Mr Royston said that Mazda had not honoured the previous owner’s warranty as he had not kept his service current. Mr Royston also said that the previous owner had the turbo reconditioned and they were not aware of this before they placed the Vehicle for sale.
  2. [19]
    On or about 11 November 2012, Mr Royston contacted Mr Rees and said ‘we aren’t obliged to do anything for you, however as a sign of good faith, we will cover the cost of labour to repair the turbo if [Mr Rees] would come halfway and pay for the parts which could be up to a $1,000’. Mr Rees said that he didn’t have that much money at the time and needed to think about their offer.
  3. [20]
    On or about 12 November 2012, Mr Rees contacted the Service Manager of Mazda Southport for advice and was informed that turbo repairs of this type ‘could be guaranteed’ (presumably ‘could not be guaranteed’) as it was very complex. He was also informed that even if the repairs were done through Mazda they would not carry a guarantee on the work.
  4. [21]
    On or about 12 November 2012, Mr Rees also visited Capri Auto in Southport, and they informed him that the only way they had found to have a good repair is to take the engine out and clean it thoroughly by pressure washing and replacing oil supply pipes and not blowing them or its parts with air (as Wheels That Work had suggested they would do). Capri Auto also informed Mr Rees that to have any success at all there must be no sludge or dirt anywhere in the engine or it will cause the turbo to fail again. Both the Mazda Dealer and Capri Auto advised Mr Rees that the vehicle would have to be checked for oil sludge every 5,000 km to safely minimize the risk of the fault reoccurring.
  5. [22]
    On or about 13 November 2012, Mr Rees returned to Wheels That Work and requested that they have the appropriate repairs done by Capri Auto but they rejected this remedy.
  6. [23]
    Mr Royston informed Mr Rees that they would repair the vehicle for around $1,300.00 for labour and the parts would cost around $1,100.00. He did not agree to this as he wanted the job done correctly and he refused to pay for any cost at all.
  7. [24]
    On 5 December 2012, at around 11am, Mr Rees again attended the premises of Wheels That Work. His wife accompanied him on this occasion. Mr Rees decided to tape the meeting on his mobile phone telephone voice recorder.
  8. [25]
    They were met on this occasion by Mr Royston and during the next half an hour or so Mr Royston said the following in regard to the Vehicle;

a) I agree that the vehicle is not mechanically sound;

b) The vehicle does not have a good reputation;

c) The vehicle is still under new car warranty but Mazda will not guarantee the motor under the warranty;

d) The vehicle was represented to you as having a new car warranty however we as a dealer could not say for sure that it was under new car warranty and that as a dealer we are not responsible for the vehicle not actually being under warranty;

e) We will sell it for you to another customer and inform them of the damage before they purchase it;

f) If it’s not the car you thought you were buying – fix it and sell it.

  1. [26]
    In the Claim, Mr Rees claimed financial loss of $38,893.60 comprising $7,750.00 being the estimated repair costs referred to above and $31,143.60 being the amount allegedly required to repay the finance agreement between Mr Rees and Esanda Finance.

The Submissions

  1. [27]
    The Chief Executive has filed written submissions on 19 May 2014 (the Chief Executive’s original submissions) and on 22 April 2015.
  1. [28]
    In the original submissions, the Chief Executive submitted:
    1. a vehicle’s poor or non-existent service history will often void (partially or in full) its new car warranty and that a reasonable motor dealer would have been aware that such a history is very likely to have a detrimental effect on a new car warranty and it would be misleading or deceptive to not disclose this to a purchaser, particularly a purchaser who conveys how important the coverage of a new car warrant is to his/her decision to purchase a vehicle;[2]
    2. in considering whether the First and Fifth Respondents have breached s 574 of PAMDA, the Tribunal is to consider whether they have a defence under s 24 of the Criminal Code, that is, whether the First Respondent and Mr Royston have an honest and reasonable but mistaken belief that the Vehicle did not have a poor or non-existent servicing history and, further, if the Tribunal finds that the representation was made, they bear the evidentiary onus to show that they had reasonable grounds to make the representation;[3]
    3. the Vehicle travelled a further 14,369 km whilst in the possession or control of Mr Rees and it is possible that the use or misuse of the Vehicle during the period from 9 March 2012 to 2 November 2012 may have contributed towards or caused the alleged defects to emerge;[4]
    4. Mr Rees, in the knowledge that he had not been provided with the Vehicle’s service history, did not have the Vehicle inspected before 2 November 2012 and if he had taken it to be inspected within a reasonable time after buying, it is possible that the alleged defects would have been identified sooner and rectified at less expense and the Vehicle potentially may not have deteriorated to the point it did;[5]
    5. the claim for repair costs by Mr Rees should be rejected because he has not actually suffered such loss;[6]
    6. Mr Rees has not suffered a financial loss from the termination of his loan;[7]
    7. the Claim ought to be rejected.[8]
  1. [29]
    The First, Second and Third Respondents filed written submissions on 31 July 2014. They submitted, among other things:
    1. at no time did they make any of the alleged verbal representations and such representations were made exclusively by Mr Royston;[9]
    2. the First Respondent denied representing to Mr Rees that the vehicle is covered under a new car factory warranty;[10]
    3. there appears to be no evidence to support the alleged wording on the ‘spec” sheet;[11]
    4. the validity and substance of the Claim should be doubted because, first, the claim was made on 3 October 2013, 11 months after Mr Rees had the vehicle inspected, secondly, Mr Rees lodged the claim only after he had defaulted on his finance agreement with Esanda and, thirdly, Mr Rees made no claim as against the statutory warranty within the prescribed period;[12]
    5. the claim regarding the finance payout is ‘fallacious’ because, first, Mr Rees may still be in possession of the vehicle, secondly, if he is not still in possession, the Vehicle has presumably been recovered by the financier by virtue of having security of the vehicle and, thirdly, Mr Rees has defaulted on his finance agreement as it is not plausible that Esanda would terminate the agreement because the vehicle had defects as alleged;[13]
    6. Mr Rees has not demonstrated that he has suffered any financial loss as required under the Act;[14]
    7. the Tribunal would need to be satisfied that the alleged damage or defects did not come about as a result of the use of the Vehicle during the period from 9 March 2012 to 2 November 2012.[15]
  2. [30]
    With respect to Mr Royston, he sent a letter to the Chief Executive dated 16 December 2013 in which he referred to his record of interview with the Office of Fair Trading (‘OFT’) earlier that year. In the Chief Executive’s original submissions it was noted that the OFT had not interviewed Mr Royston and had no record of such an interview. Rather, a member of the OFT attended at the First Respondent’s premises and had an informal conversation with Mr Royston on 7 March 2013; Mr Royston was invited to participate in a formal interview but he had not yet done so.
  1. [31]
    In a subsequent letter dated 11 February 2015 Mr Royston contended that he was not a director of the First Respondent (or the Second or Third Respondents); they were the appropriate relevant persons and that he should be released as a respondent from the proceedings.
  2. [32]
    Mr Rees filed submissions on 28 August 2014 in response to the First, Second and Third Respondents’ submissions. Mr Rees submitted, among other things:
    1. the reason for lodging the Claim in May 2014 was not due to default under the finance agreement; rather it was due to Mr Rees transitioning between jobs;[16]
    2. he made no claim against the statutory warranty within the prescribed period because he first became aware of the defects on 28 October 2012 and believed that the Vehicle was still under a new car warranty and he first became aware that it was not under a new car warranty on 2 November 2012;[17]
    3. the Vehicle had not been repossessed by Esanda and Mr Rees is still in possession of the Vehicle (and the reason why the finance agreement was terminated was because Mr Rees was unable to pay the loan repayments);[18]
    4. Mr Rees claimed $33,000.00 being a full refund of the purchase price or, in the alternative, the sum of $7,750.00 being the cost of repairing the Vehicle.[19]
  1. [33]
    By submissions dated 24 December 2014 (in response to directions of the Tribunal dated 3 December 2014), Mr Rees stated, among other things:
    1. in response to the reason that the finance agreement with Esanda has not been terminated, he said that there are several reasons for this, mainly the fact that at every stage he had informed them of his financial situation and more importantly the case against Wheels That Work.
    2. on or about 24 February 2012, Mr Royston was introduced to him as the Business Manager of Wheels That Work by the ‘Car Washer’ outside when he viewed the vehicle. Mr Royston introduced himself as the Business Manager and gave him his business card stating he was the Business Manager of Wheels That Work.
    3. the spec sheet was the standard generic blue and white notice found in all vehicles for sale. Nothing extraordinary was mentioned besides all the features such as the turbo engine capacity, manufacturer, model and make, year of the vehicle, Bose sound system, odometer reading, leather trim, and remainder of New Car Warranty.
    4. Mr Rees’ only complaint during the statutory warranty period was that Wheels That Work could not supply him with a spare key, service log book and manual for the Vehicle.
    5. the financial hit Mr Rees was taking having one vehicle for the family with two income earners had gotten to the point that he had to borrow $4,000.00 and repair the Vehicle to a safe condition so that he could drive to and from work. However, this left him with a car that required service every 10,000 km in order to maintain the repair. Mr Rees asserted that while it is a good repair, it is not a definite fix and without regular monitoring the fault is likely to reoccur.
    6. Mr Rees said that the extent and nature of financial loss suffered was ‘very hard to equate’. The vehicle was bought for $33,000.00 and he said he had spent $4,000.00 on the ‘temporary repair’ and with the service costs, to maintain it every 10,000 km would be around $300.00.
    7. Mr Rees also asserted that the lack of vehicle for this length of time since November 2012 has severely impacted on his earnings and work duties from an average working day between 8 to 10 hours prior to a 5.5 hour day as a sole trader meant that every hour he was not at work counted towards loss of income. He said that the nature of my loss can only be known when, and if, he can sell the Vehicle. Mazda has given him a rough figure of $11,000.00 (if they had repaired the Vehicle and serviced and monitored the Vehicle themselves, all of which would carry no guarantee to a buyer).
  2. [34]
    The Chief Executive’s supplementary written submissions filed on 22 April 2015 were made in accordance with the Tribunal’s directions made on 27 March 2015.
  1. [35]
    In these submissions, the Chief Executive submitted, amongst other things:
    1. the Claim must be determined in accordance with the provisions of the Agents Financial Administration Act 2014 (Qld) (‘AFAA’) which commenced on 1 December 2014;
    2. it was not disputed that Mr Rees paid $33,000.00 for the Vehicle on or about 9 March 2012. In order for the Tribunal to determine financial loss, Mr Rees must adduce evidence of what the actual value of the Vehicle was as at that date.
    3. Mr Rees’ claim for repair costs as an additional amount should be rejected because it would otherwise result in being compensated twice for the same loss.
    4. the current value of the Vehicle as at 19 March 2015 was of no assistance as the Vehicle was more than three years older than when it was purchased and had travelled at least a further 14,369 km and the extent to which the use or misuse of the Vehicle contributed to or caused the damage to emerge since the sale remained unclear.
    5. the Chief Executive had received no material to suggest that Mr Rees had paid for any repairs to be done to the Vehicle.
    6. if Mr Rees cannot prove and quantify the financial loss which he suffered, the Claim ought to be rejected.
  1. [36]
    On 27 May 2015, Mr Rees caused an email to be sent to the Tribunal at 5.09pm containing an email from Mr Angelo Bianchin, wholesaler, of James Frizelle’s Automotive Group sent on 27 May 2015 at 12.53pm. The email stated:

To whom it may concern,

As at the date of purchase without logbooks, missing key and mechanical defects that subsequently became public knowledge I Angelo Bianchin Valuer/Buyer
Of James Frizelles Southport have assessed and valued this 2009 Mazda cx7 lux Rego number (566SDH) in as is condition.

$7000.00 in my opinion on today’s market.

  1. [37]
    At the hearing on 3 June 2015 this email was admitted as Exhibit 3.
  1. [38]
    Mr Rees also caused a further email to be sent to the Tribunal on 27 May 2015 at 8.01pm. This email purported to have been copied to Mr Manhire of the First, Second and Third Respondents’ lawyers. It attached a copy of two documents. The first was a tax invoice from Capri Auto Service Centre dated 17 October 2014 in relation to the Vehicle which diagnosed a worn turbocharger and a worn timing chain and referred to various work being performed on the Vehicle with a total price of $3,982.30. The next document was a ‘Customer Receipt’ from Capri Auto service in the amount of $3,982.30.

The Hearing

  1. [39]
    Mr Rees appeared on his own behalf at the hearing.
  1. [40]
    The Chief Executive did not appear (I note that the Chief Executive was not obliged to do so).
  2. [41]
    The Solicitors for the First, Second and Third Respondents did not appear at the hearing. The Tribunal contacted their lawyer, Mr Manhire. He informed the Tribunal, by telephone, that his clients did not intend to appear and relied upon their written submissions.
  3. [42]
    Mr Royston did not appear.
  4. [43]
    The Fourth Respondent was previously ordered to be removed as a respondent to the proceedings by an order of the Tribunal delivered on 3 December 2014.
  5. [44]
    Mr Rees informed the Tribunal that he had served the email which is Exhibit 3 on the Chief Executive and the Respondents.
  6. [45]
    After hearing from Mr Rees, I adjourned the hearing to be determined on the papers.
  7. [46]
    I directed that Mr Rees serve on the Chief Executive and each of the Respondents a copy of Exhibit 3 and any further evidence clarifying the content of that document within seven days (and that he also file in the Tribunal an affidavit of service of those documents within seven days of service).
  8. [47]
    I also directed that the Chief Executive and each of the Respondents have leave to file any further submissions in response to the evidence served on them within 14 days of receipt of the evidence. No submissions in response were received by the Tribunal.
  9. [48]
    Mr Rees has filed an affidavit of service. It deposes to service on the Chief Executive, the solicitors for the First, Second and Third Respondents and on Mr Royston an email from Mr Fraser Perrin of James Frizelle’s Automotive Group. The covering letter states there is attached a copy of the email which has been marked as Exhibit 3 ‘revised in support of evidence to my case …’
  10. [49]
    The email states, amongst other things:

I also refer to the appraisal provided to you by Mr Angelo Bianchin of our business in respect of the above vehicle in the sum of $7,000.

I have spoken to Angelo, and I can confirm that the figure that he placed on the subject vehicle, in light of the impediments to its value, was the sum of $7,000 as at the date of the 9th March 2012. This figure is the best possible indication of a retrospective Valuation we can provide in light of not having seen the car as the date of deemed valuation.

  1. [50]
    It appears that, contrary to the directions made, Mr Rees did not serve a copy of Exhibit 3; he only served a copy of the above email.

Jurisdiction

  1. [51]
    Prior to 1 December 2014, the jurisdiction of the Tribunal to determine the Claim was governed by PAMDA. In my view the Tribunal had jurisdiction to determine the Claim pursuant to s 450(b) of PAMDA. The Claim was for an amount exceeding $10,000.00 and, consequently, was not a ‘minor claim’ within the meaning of that Act.
  1. [52]
    The AFAA commenced on 1 December 2014. By virtue of s 155:
    1. the rights and liabilities of the claim fund under PAMDA are taken to be the rights and liabilities of the claim fund under the AFAA (see subsection (1));
    2. a claim that has been made against the former fund, and not finished before the commencement date, continues as if it were a claim against the current fund (see subsection (2)). The current fund is established pursuant to s 78 of the AFAA.
  1. [53]
    In my view, by virtue of these provisions, various provisions of the AFAA apply to the hearing of this proceeding, including s 105, s 106 and s 116. However, I also consider that the matter is to be determined having regard to whether Mr Rees can establish that he was entitled to make the Claim under s 470(1) of PAMDA; it was the operative provision applicable in relation to the matters complained of by Mr Rees.

Determination of the Claim

  1. [54]
    Pursuant to s 470(1) of PAMDA, a person may make a claim against the fund if the person suffers financial loss because the happening of specified events, the relevant one in this case being a contravention of s 574.
  2. [55]
    Pursuant to s 574(1) a licensee (or registered employee) must not represent in any way to someone else anything that is false or misleading in relation to the letting, exchange or sale of property. Subsection (3) provides that, without limiting subsection (1) or (2), a representation is taken, for the subsection, to be false and misleading if it would reasonably tend to lead to a belief in the existence of a state of affairs that does not in fact exist, whether or not the representation indicates that that state of affairs does exist.
  3. [56]
    The factual matters related by Mr Rees in relation to his dealings with the First Respondent and Mr Royston are unchallenged by evidence adduced from the Respondents. I accept Mr Rees’ evidence. Mr Royston orally informed Mr Rees that the new car warranty was still valid for approximately 9 months. I find that the content of the ‘spec’ sheet on the windscreen of the Vehicle was to similar effect. The First Respondent made such statement by placing, or permitting to be placed, the ‘spec’ sheet on a vehicle (the Vehicle) offered for sale at premises. I find that Mr Royston made the oral statement within his apparent authority in the course of acting as an employee or, alternatively, agent of the First Respondent (as further discussed below).
  4. [57]
    In my view, the First Respondent (and Mr Royston) impliedly represented, by the conduct identified above, that there was presently no obstacle or impediment to a warranty claim being made in respect of the Vehicle.
  5. [58]
    Based on the oral statements made by the Mazda representative at the Southport dealership and the content of the November invoice, I am satisfied that the implied representation was false or misleading. The Vehicle had a poor (or no) service history and there was a notation regarding warranty claims against the Vehicle (that is, the Vehicle had been ‘flagged’ by Mazda).
  6. [59]
    In order to determine whether there has been a contravention of s 574, it is necessary to consider whether the person alleged to have contravened section had a defence under s 24 of the Criminal Code, modified by the reversal of onus in relation to the proof of the existence of reasonable grounds in s 574(5).[20]
  7. [60]
    Section 24(1) of the Criminal Code provides:

A person who does or omits to do an act under an honest and reasonable, but mistaken, belief in the existence of any state of things is not criminally responsible for the act or omission to any greater extent than if the real state of things had been such as the person believed to exist.

  1. [61]
    Neither the First Respondent nor Mr Royston sought to adduce evidence in relation to this issue. In the absence of such evidence, I find that no defence has been established under s 24 of the Criminal Code. Even if such evidence had been led, it would have been a difficult task for such a defence to be established given the absence of the logbook containing the service history of the Vehicle. In the absence of the service history, there would be no apparent basis for the First Respondent or Mr Royston to believe that any warranty claim would be honoured by Mazda. Even if there had been an honest and mistaken belief that the warranty applied to the Vehicle, I consider that it would not have been a reasonable one. In any event, the Respondents have not established that they were under any such honest belief.
  1. [62]
    Further, pursuant to s 470 of PAMDA, the contravention must be by a ‘relevant person’. That phrase is defined in s 469 to mean, inter alia, a licensee or a licensee’s employee or agent.
  2. [63]
    I am of the view that the First Respondent was a ‘licensee’ within the meaning of that term in PAMDA. In [20] of the Chief Executive’s original submissions it was stated that the First Respondent held a Motor Dealer Corporation License number 2001785 from 6 November 1996 to 24 October 2013. Further, a ‘PAMD Form 63’ (the Form 63) provided (in relation to the purchase of the Vehicle) that the First Respondent was a ‘licensed motor dealer’. I find that the First Respondent was a ‘licensee’.
  3. [64]
    I also find that Mr Royston was an employee or agent of the First Respondent. In the Chief Executive’s original submissions, it is stated that Mr Royston was an employee of the First Respondent (see [20]). In the letter from Mr Royston to the Chief Executive dated 16 December 2013, he stated that the OFT should be directing enquiries to the directors of the First Respondent (along with the partner of the Fourth Respondent) who ‘asked myself to communicate your claimant in all aspects’. Mr Royston negotiated the sale of the Vehicle (including negotiating the trade in price of the old vehicle of Mr Rees) and also arranged finance as well as preparing, issuing and completing the contracts with Mr Rees. I find that this conduct was engaged in on behalf of the First Respondent.
  4. [65]
    The next question is whether Mr Rees has suffered financial loss because of the contravention of s 574.
  5. [66]
    In order for Mr Rees to establish that he has suffered financial loss because of the happening of the contravention of s 574, it is necessary that he prove that he relied upon the representation in question.[21] As was said by McGill DCJ in London:[22]

An express assertion of reliance is not necessary in order to support a finding of reliance, nor will an express assertion of reliance necessarily be sufficient to support such finding. As a general proposition, ‘if it is proved the defendants with a view to induce the plaintiff to enter into a contract made a statement to the plaintiff of such a nature as would be likely to induce a person to enter into a contract, and it is proved that the plaintiff did enter into the contract, it is a fair inference of fact that he was induced to do so by the statement.’

  1. [67]
    I infer that Mr Rees was induced to purchase the Vehicle in reliance on the representation. In this respect, there is the evidence of Mr Rees in relation to his previous vehicle being purchased from Wheels That Work with the balance of its new car warranty still intact (which appealed to him). There is further evidence that he informed Mr Royston, prior to the purchase, that the biggest selling point for him was the bonus security of having the balance of the new car warranty still on the Vehicle. I find that there is an obvious attraction to the purchaser of a second-hand vehicle that the vehicle is still under a manufacturer’s warranty. I find that the above matters justify an inference that Mr Rees would not have purchased the Vehicle had the representation of been made. In other words, it is a ‘no transaction’ case.
  1. [68]
    The remaining issue is whether Mr Rees has established that he has suffered some, and if so what, loss as a consequence of the contravention of s 574.
  2. [69]
    In my view, the prima facie measure of loss is the difference between the price paid for the Vehicle and the value of what was obtained.[23]
  3. [70]
    The material includes what appears to be a roadworthy certificate in relation to the Vehicle. The certificate refers to an inspection date of 8 March 2012 and to an odometer reading of 26,730 km. The Form 63 refers to an odometer reading of 26,737 km. I find that this was the approximate odometer reading at the time of purchase.
  4. [71]
    With respect to that component of the Claim relating to the payout figure for the finance obtained from Esanda, I find that it does not constitute loss suffered by Mr Rees as a consequence of the contravention. First, the amount borrowed was paid for the acquisition of the Vehicle, it formed part of the capital cost to acquire the property in question (the Vehicle). As noted above, the prima facie measure of loss is the difference between the price paid and the value of what was obtained. To the extent that the payout figure included a component of interest, the material does not identify the amount of interest and, as a consequence, no loss could be identified even if it were otherwise recoverable. However, in view of the fact that Mr Rees has had the use of the Vehicle (other than during the period the Vehicle was off the road) is difficult to see how the interest component would be recoverable. In any event, such loss may be too remote to be compensable[24] (but it is unnecessary to make a concluded finding in this regard).
  5. [72]
    Has Mr Rees established a difference in value between what was paid and the market value of the Vehicle at the date of acquisition?
  6. [73]
    The evidence of Mr Bianchin suggests that the value of the Vehicle was only $7,000.00. If this evidence were accepted that would result in a loss to Mr Rees of $26,000.00. Although the Respondents did not adduce valuation evidence, I am unable to accept the evidence of Mr Bianchin for the following reasons.
  7. [74]
    First, Mr Bianchin provides no explanation of the basis upon which he arrived at the figure of $7,000.00. It is a baldly stated conclusion and does not include any explanation of the impact on the value caused by, respectively, the lack of a logbook, the lack of a second key and the ‘mechanical defects’ in the Vehicle.
  8. [75]
    Secondly, the estimate provided by Southport Mazda to repair the engine problems in early November 2012 totalled $7,750.00. I draw the inference that the performance of those repairs would have placed the Vehicle in a proper operating condition. That being the case, it is unclear how Mr Bianchin assessed the vehicle to have a value of only $7,000.00 as at 9 March 2012 even if some generous allowance was made for the lack of a logbook and a second key.[25] In the case of the second (or spare) key, given that one key was provided, it is difficult to see how the cost of a second key could have been more than a few hundred dollars.
  9. [76]
    Thirdly, the factual basis upon which Mr Bianchin based his assessment included reference to the ‘mechanical defects that subsequently became public knowledge’. He does not identify what he was referring to as the mechanical defects. Even if it could be assumed that such defects comprised the problems with the turbo and the timing chain as identified subsequently by the Southport Mazda dealership, there is no evidence of the extent to which, if at all, those defects existed as at 9 March 2012. The Vehicle had travelled in excess of 13,600 km between the date of purchase and the emergence of the issues that resulted in the Vehicle being taken to the Southport Mazda dealership (40,369 km (less some allowance for travel between 28 October 2012 and 2 November 2012) less 26,737 km (being the odometer reading as at 2 March 2012). In my view, it is also relevant that the service schedule required servicing of the Vehicle every 10,000 km.[26] During the initial period of ownership of the Vehicle by Mr Rees, the Vehicle would have been due for a scheduled service at 30,000 km (and 40,000 km). Mr Rees has adduced no evidence that the Vehicle was serviced at all between the date of purchase and the date on which he took the Vehicle into the dealership Southport Mazda. Mr Rees makes no reference to any problems with the Vehicle at any time prior to on or about 28 October 2012. There is no evidence from a mechanic to establish what would likely have been the condition of the Vehicle as at the date of purchase having regard to the state of the Vehicle in early November 2012. In light of these matters, I am not satisfied that Mr Rees has established the factual basis upon which Mr Bianchin based his estimate of value in so far as the ‘mechanical defects’ are concerned. I cannot be satisfied that the value arrived at by Mr Bianchin is based on a condition of the Vehicle which reflects its condition as at the date of purchase.
  10. [77]
    Given that I have rejected the evidence of Mr Bianchin, I find that there is no satisfactory basis for determining the market value of the Vehicle as at the date of purchase. In my view, in some circumstances it may be appropriate to have regard to the cost of repairs to determine the market value of a vehicle. However, in the present case, the estimated repair costs of $7,750.00[27] arose in the context that the Vehicle had been driven for more than 13,600 km (over a period of about 7.5 months) without any servicing. In my view, these matters make it unsafe to extrapolate an estimate of the value of the Vehicle as at 12 March 2012 based on the subsequent repair estimate (or the actual repair costs much later). I find that Mr Rees has not established that he has suffered the claimed loss.
  11. [78]
    For these reasons, I reject the Claim pursuant to s 105(1) and s 106(1)(a) of the AFAA.
  12. [79]
    For completeness, I note that the evidence of Mr Bianchin factored in the absence of a logbook and a spare key. In my view, Mr Rees must have known that there was no spare key when he collected the Vehicle. Further, it appears that Mr Rees failed to notice that the Vehicle did not have a logbook until about a week after the purchase. Subsection 105(3)(a)(i) of the AFAA provides that if the Tribunal decides to allow the claim, wholly or partly, it must take into account any amount a claimant might reasonably have received or recovered if not for the claimant’s neglect or default. In my view, if Mr Rees had been otherwise entitled to recover financial loss based on the evidence, such loss should not have included compensation based on an assessment of value which factored in the absence of a logbook or a spare key.
  13. [80]
    Had I allowed the claim, I would have named each of the First Respondent, the Second Respondent and the Third Respondent as a person liable for the financial loss in the amount of the loss of Mr Rees. In this respect, I accept the Chief Executive’s original submissions at [40] and [41]. With respect to the Second Respondent, an ASIC and business names search of the First Respondent conducted on 9 October 2013 indicates that the Second Respondent was a director of the First Respondent as at the date of the search and had had been a director since 15 August 1989. That search also indicates that the Third Respondent was a director from 19 August 1996 to 10 June 2013. This period includes the relevant period the subject of the complaints of Mr Rees. By virtue of s 116(4) of the AFAA, each of the following persons is jointly and severally liable to reimburse the fund to the extent of the amount paid from the fund for the claim, first, the responsible person and secondly, if the responsible person is a corporation, each person who was an executive officer of the corporation and the relevant event (mentioned in s 82) happened. Section 82 is the successor provision to s 470 of PAMDA. ‘Executive officer’ (for a corporation) is defined in Schedule 1 to the AFAA to mean ‘a person, by whatever name called and whether or not the person is a director of the corporation, who is concerned, or takes part, in the management of the corporation’. I find that each of the Second Respondent and the Third Respondent was an executive officer in respect of the First Respondent.
  14. [81]
    With respect to the question of costs, given the findings made and the non-appearance of the Respondents at the hearing, I consider that the appropriate order for costs is that the parties must bear their own costs of the proceeding (see s 100 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld)).

Footnotes

[1]See the letter from the Manager, Claims and Recoveries, Department of Justice and Attorney General to the Registrar of QCAT dated 15 May 2014.

[2]The Chief Executive Submissions dated 19 May 2014, at [26].

[3]Ibid at [28].

[4]Ibid at [29], first dot point.

[5]Ibid at [29], second dot point.

[6]Ibid at [31].

[7]Ibid at [34].

[8]Ibid at [35].

[9]First, Second and Third Respondents Submissions dated 31 July 2014, at [7(a)].

[10]Ibid at [7(b)].

[11]Ibid at [7(b)(i)]; see also [13].

[12]Ibid at [11].

[13]Ibid at [12].

[14]Ibid at [15].

[15]Ibid at [16].

[16]Mr Rees submissions filed 28 August 2014, at [6(b)].

[17]Ibid at [6(c)].

[18]Ibid at [7].

[19]Ibid at [14].

[20]London & Anor v Reynolds [2006] QDC 380 at [18].

[21]Ibid at [41]-[42].

[22]Ibid at [42].

[23]Ibid at at [46].

[24]Cf Gurdag v Stillwell Ford Pty Ltd (1985) 61 ALR 689 at 699.

[25]With respect to the key, it must have been obvious to Mr Rees that there was only one key when he took possession of the Vehicle.

[26]See the submissions of Mr Rees dated 24 December 2014, at [f].

[27]The Vehicle does not appear to have been repaired until October 2014 (at a cost $3,982.30).

Close

Editorial Notes

  • Published Case Name:

    Rees v Mighty Enterprises Pty Ltd & Ors

  • Shortened Case Name:

    Rees v Mighty Enterprises Pty Ltd

  • MNC:

    [2015] QCAT 312

  • Court:

    QCAT

  • Judge(s):

    Member Lumb

  • Date:

    07 Aug 2015

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Gurdag v Stillwell Ford Pty Ltd (1985) 61 ALR 689
2 citations
Jump To
Cite 1 - (1985) 61 ALR 689
Cite 2 - (1985) 61 ALR 689
London v Reynolds [2006] QDC 380
5 citations
Jump To
Cite 1 - [2006] QDC 380
Cite 2 - [2006] QDC 380
Cite 3 - [2006] QDC 380
Cite 4 - [2006] QDC 380
Cite 5 - [2006] QDC 380

Cases Citing

Case NameFull CitationFrequency
Mann v McCreath [2016] QCAT 4772 citations
Richards v Chopperworks Pty Ltd (externally administered) [2017] QCAT 4532 citations
Scanlan v McCreath [2017] QCAT 4612 citations
Turnbull v McCreath [2017] QCAT 1903 citations
1

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